"The Roof Is on Fire!" Volkswagen CEO Calls for Immediate Cost Cutting

In the one-hour online meeting, Thomas Schafer pointed out that the carmaker is "letting the costs run too high in many areas." More than 2,000 senior mangers participated in the discussion.

"All is as stake!" the 53-year old told those attending the meeting, also saying that the next weeks and months will be "very tough" for Volkswagen. The company is going through trials and tribulations, so he called on the managers to try to make "small wins," sources reveal. By these "small wins," he is actually referring to billions in savings.

In order to do just that, the upcoming financial strategy will include "performance programs" that target savings of as much as 10 billion euros ($11,2 billion) over the next three years. The call for freezing spending was with immediate effect.

Thomas Schafer blames it on "structures and processes" being "too complex, slow, and inflexible."

The company’s Chief Financial Officer Patrik Andreas Mayer admitted that the "vehicle business is unwell" and warned about this being the "last call." The upper management says they need "team spirit now more than ever" in order to keep the business afloat, as per British publication Autocar.

This is happening also because Volkswagen, just like almost any carmaker out there, heavily invested in electrifying the lineup. It turns out, though, that the market is not ready to make a sudden switch from combustion engines to fully electric cars, so the move is not exactly returning much.

Thomas Schafer was appointed Volkswagen’s CEO back in July 2022. A year at the helm of the company and he is panicking. And that’s for all the right reasons.

The ID lineup has been going through its own tough times. First it was the software issue, then it was the firing of Herbert Diess, who had his own EV marketing strategy. That it was (and still is!) the massive debts that Volkswagen has to deal with.

According to a report from Global Finance Magazine, the second top-selling manufacturer in the world is also the second most indebted. In the attempt of becoming the world’s EV market leader by 2025, had a $166 billion debt back in February. But the company is willing to make loans again in an attempt to come out of the predicament.

Volkswagen is Europe’s largest automaker, but has been doing well in the US and China for decades. The latter, which is the biggest market for Volkswagen, has become somewhat unwelcoming for the Germans. To keep up with Tesla and the local manufacturers, Volkswagen has been forced to slash prices.