Volkswagen has unveiled a series of cost-cutting initiatives, including salary reductions for top executives and lower production volumes at its German factories.
These measures aim to improve the company's financial stability in response to mounting industry pressures, as reported by Autokult.
Executive Pay Cuts and Financial Savings
Between 2025 and 2026, Volkswagen board members will see their base salaries and annual bonuses reduced by 11%. Further reductions are planned in the following years, with 8.5% in 2027, 6.5% in 2028, and 5.5% in 2029. The company expects these cuts to generate €15 million in savings.
Additionally, salary reductions will extend to senior management, contributing to an additional €300 million in cost reductions. In 2023, the nine board members collectively earned over €40 million, with CEO Oliver Blume receiving €9.7 million.
A previous proposal to cut executive salaries by 5% was criticized by the company’s labor representatives as insufficient.
Production Reductions and Shareholder Impact
Volkswagen is also scaling back its production capacity in Germany by approximately 734,000 vehicles annually.
The Osnabrück plant will cease manufacturing the T-Roc Cabrio by mid-2027, though the company has not yet disclosed what models will be produced there in the future.
These financial adjustments could also affect shareholders. Volkswagen has traditionally maintained a dividend payout ratio above 30%, but analysts predict it may drop below this level for the first time in years.
Amid rising production costs and global economic uncertainty, Volkswagen’s restructuring efforts highlight the challenges facing the automotive industry as it adapts to shifting market demands and financial constraints.
