Reports indicate that the CEO of Volkswagen AG (VWAGY.US), Oliver Blume, plans to reduce the global workforce by up to 100,000 employees over the next several years.
Additionally, Blume is reportedly targeting a reduction of approximately 15% in investments over the next five years, bringing the total down to slightly above 130 billion euros, equivalent to around 148 billion US dollars.
The reports further state that Blume and the company's CFO, Arno Antlitz, aim to undertake a comprehensive restructuring of the corporation.
It is said that the core Volkswagen brand and the component manufacturing plants are to be separated from the current group structure and merged into independent entities.
Plans are also reported to involve the closure of production facilities in Hanover, Zwickau, and Emden in Germany in the medium term, along with the Audi plant in Neckarsulm.
These production lines are slated for complete shutdown once the current vehicle models manufactured there complete their life cycles and are phased out.
The company has yet to comment on these reports.
While European car sales have shown recent recovery, offering some relief to manufacturers, significant challenges remain, including rising costs, US tariffs, and intensifying competition.
Financial data shows that in the fourth quarter of 2025, Volkswagen's revenue was 83.25 billion euros, a decline of 4.7% year-over-year, while quarterly operating profit plummeted 44.6% to 3.46 billion euros.
The outlook for the current year is not optimistic, with the company forecasting revenue growth for 2026 to be between 0% and 3%, as factors like increased raw material costs, fierce competition, and geopolitical tensions are expected to pressure returns.
Last week, BMW Group significantly lowered its performance guidance for the year, citing a deteriorating business environment and the impact of the conflict in Iran.
BMW revised its full-year EBIT margin forecast for the automotive segment down from a range of 4% to 6% to a new range of 1% to 3%.
The expectation for full-year vehicle deliveries was adjusted from "on par with the previous year" to a slight decline, while the group now anticipates a drop in pre-tax profit exceeding 15%, compared to a prior forecast of a "moderate decrease."
For the first quarter of 2026, BMW Group reported revenue of 31.007 billion euros, an 8.1% decrease year-over-year, with pre-tax profit falling 24.6% to 2.348 billion euros.
Furthermore, the artificial intelligence boom is creating headwinds for the automotive sector.
The CFO of German automotive supplier Aumovio, Jutta Denges, recently stated that negotiations to secure memory chip supplies for next year are becoming increasingly difficult as AI companies consume large portions of the critical supply.
Denges noted, "It is very difficult to procure sufficient quantities. We have approached suppliers, but no one is willing to agree on a price."
The company is also grappling with supply chain tensions stemming from the Middle East conflict and persistently high raw material prices.
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