Volkswagen Must Cut Costs Faster to Change, Chairman Says

Volkswagen’s majority owner, Porsche Automobil Holding SE, is urging the company to rapidly cut costs and excess capacity to tackle a slide in competitiveness. According to Hans Dieter Pötsch, Porsche SE Management Board Chairman and VW’s supervisory board head, Volkswagen “is at a historic crossroads” and needs to consider “every option” to usher in a turnaround. The company is negotiating measures including eliminating tens of thousands of jobs, cutting 500,000 fewer annual European production units, management cuts, and broad reductions to model variants. Volkswagen is facing a 30% cost gap to some competitors and needs to cut overhead expenses by at least 10 billion euros. The pressure to cut costs comes as Volkswagen and Porsche face weaker China sales and rising competition in Europe. Porsche SE has reported a first-half loss after tax of 2.22 billion euros ($2.6 billion) and is trying to diversify away from automaking, including setting up a fund to make defense-industry investments and buying stakes in companies such as Isar Aerospace and Quantum Systems.