Volkswagen Targets 10% Margin by 2030 With €135B Plan, 50,000 Job Cuts

Key Points

• Volkswagen targets an 8%–10% operating margin by 2030, implying approximately €31 billion in operating profit based on annual sales of 9 million vehicles.
• The company approved a €135 billion investment plan for 2027–2031 while aiming to cut overhead costs to €37 billion, or 12% of automotive revenue.
• Volkswagen expects to eliminate roughly 50,000 additional positions by 2030, reduce its model portfolio by about 50%, and address more than 500,000 vehicles of excess production capacity, potentially including plant closures.

Volkswagen ETR: VOW3 said its Supervisory Board has unanimously approved the Group Target Picture 2030, a broad transformation plan aimed at improving profitability, reducing complexity and reshaping its production, technology and organizational footprint.

Chief Executive Officer Oliver Blume said the plan is built around 12 initiatives in three areas: technology, performance and steering. The company’s target is an operating margin of 8% to 10% by 2030, based on annual sales of 9 million vehicles and flat revenue and volume assumptions. At the midpoint, Volkswagen is targeting operating profit of about €31 billion.

“Our Group Target Picture is not a simple cost reduction program,” Blume said. “It’s our plan for the future, a comprehensive transformation plan for the Volkswagen Group.”

Cost, Investment and Workforce Targets

Volkswagen plans to reduce overhead costs to €37 billion by 2030 from €48 billion in its 2025 planning round. The target would bring overhead costs to 12% of automotive revenue, compared with 16% currently, according to Chief Financial Officer and Chief Operating Officer Arno Antlitz.

The group also approved a five-year investment plan of €135 billion for 2027 through 2031, approximately €30 billion below the current planning round. Volkswagen aims to reduce its investment ratio to 9% of revenue by 2030.

In addition to previously announced workforce measures, the company said it expects to reduce global workforce capacity by roughly 50,000 positions through 2030. About half of those positions are expected to be in Germany, with management roles reduced by one-quarter, or about 5,500 roles. Blume said Volkswagen had already eliminated 1,100 management positions during the current year.

The new reduction is on top of programs already under way covering 50,000 positions in Germany and about 20,000 globally under agreements reached in 2024, according to the executives.

• Operating-margin target: 8% to 10% by 2030
• Midpoint operating-profit target: approximately €31 billion
• Five-year investment plan: €135 billion from 2027 through 2031
• Overhead-cost target: €37 billion, or 12% of automotive revenue
• Additional workforce adjustment: approximately 50,000 positions by 2030

Portfolio Simplification and Plant Capacity

Volkswagen plans to streamline its model portfolio by around 50% and reduce component variety by 75% by 2035. Blume said the company intends to focus resources on fewer products while tailoring platforms, electrical and electronic architectures, advanced driver-assistance systems and software for the Western and Eastern hemispheres.

Antlitz cited overlapping product offerings as an example of complexity the group intends to eliminate. He said Volkswagen believes it can address market segments with fewer, more targeted models while improving scale and supplier costs.

The company also said excess production capacity of more than 500,000 vehicles must be addressed. Under current cost structures, Volkswagen said it cannot secure competitive future production allocations on a staggered basis from 2031 to 2034 for its plants in Emden, Zwickau, Hanover and Neckarsulm.

Those plants have six to 12 months to develop sustainable, competitive concepts and cost structures, while Volkswagen assesses alternative uses. Blume said plant closures would be a last resort, but said the company would close a plant if no other viable option is found. The group is targeting a further reduction of 500,000 units of annual capacity and a €1.5 billion reduction in its cost gap.

Regional Strategy and Cash Flow

Volkswagen said Europe remains its home market and that it intends to reinforce its leadership position there. In China, the company aims to remain the largest foreign automotive manufacturer through its “In China, for China” strategy, while also using China as a technology and export hub.

The group’s 9 million-unit planning assumption includes approximately 2.7 million vehicles in China and 6.4 million in the rest of the world, Blume said. Volkswagen expects about 70% of its China deliveries to be new-energy vehicles and 30% to be internal-combustion vehicles by 2030.

In North America, Volkswagen plans to pursue profitable growth through greater localization, a more focused product lineup and an emphasis on more attractive segments. Blume pointed to rugged SUVs and pickups as profit pools where the company sees opportunities, including through Scout and potential offerings from Volkswagen and Audi.

Antlitz said the company is targeting a cash conversion rate of 60% by 2030. Based on a €30 billion operating-profit target, excluding financial services, that would equate to roughly €15 billion, he said. Volkswagen reported net liquidity of €34 billion and said it would weigh strengthening the balance sheet, managing hybrid bonds and its dividend policy when allocating future cash generation.

The executives said more detailed information on the profitability bridge and timing of individual measures is expected to be provided at a later investor event in Paris.

About Volkswagen (ETR:VOW3)

Volkswagen AG manufactures and sells automobiles in Germany, Europe, North America, South America, the Asia-Pacific, and internationally. The company operates through four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. The Passenger Cars and Light Commercial Vehicles segment engages in the development of vehicles, engines, and vehicle software; produces and sells passenger cars and light commercial vehicles, and related parts; and offers motorcycles.

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