Europe's leading automaker, the Volkswagen Group, is tightening its belt in response to mounting challenges in its two most critical markets. The company's CEO, Oliver Blume, has revealed a revised investment plan totaling 160 billion euros ($186 billion) through the year 2030.
Shrinking Investment Reflects Market Pressure
This new spending blueprint, which is updated annually as part of a rolling five-year plan, represents a significant pullback. It compares to 165 billion euros earmarked for the 2025-2029 period and a peak of 180 billion euros set for 2024-2028. The reduction underscores the severe headwinds the German automotive giant is facing.
The group, which includes prestigious brands like Porsche and Audi, has been hit hard by a double blow. In the United States, punitive tariffs on imports have increased costs. Simultaneously, in China, the world's largest car market, Volkswagen is grappling with fierce competition from local electric vehicle manufacturers.
Porsche Bears the Brunt, Reconsiders EV Strategy
The profit squeeze has been particularly acute for Porsche, which sells approximately half of its cars in just these two troubled markets. The financial strain has forced Porsche to implement a major roll-back on its electric vehicle strategy and initiate an extended savings programme that will now run into 2026.
In an interview with the Frankfurter Allgemeine Sonntagszeitung, CEO Blume emphasized a strategic pivot. The focus of the latest spending plan is now squarely "on Germany and Europe," covering products, technology, and infrastructure. While growth in China is not expected for Porsche, Blume suggested that localising production within the wider Volkswagen group is possible. He even floated the idea of a tailor-made Porsche model for the Chinese market in the future.
Future Plans: US Plant and Leadership Stability
On the question of manufacturing in the United States, Blume indicated that considerations for a potential Audi plant depend on receiving substantial financial support from Washington. In a significant leadership move, Blume will step down as Porsche CEO in January to concentrate fully on his role as the Volkswagen Group CEO.
He also highlighted that his recent contract extension as Volkswagen CEO until 2030 is a clear signal of support from the company's major investors. These include the shareholding Porsche and Piech families and the German state of Lower Saxony. However, Blume candidly acknowledged shareholder discontent, stating, "But it is true, of course, that shareholders have suffered losses since Porsche went public three years ago. I, too, must face up to this criticism."
The revised investment plan marks a cautious new chapter for Volkswagen as it navigates a transformed and challenging global automotive landscape, prioritizing its home turf while reassessing its approach in key international markets.
