Investing.com -- Volkswagen's (ETR: VOWG_p) complex governance structure and persistent cost problems have left many investors viewing the German automaker as simply "not fixable," but the approval of its Zukunftsplan 2030 restructuring plan could begin to challenge that perception, Deutsche Bank analysts said.
Investor scepticism had centred less on whether Volkswagen faced serious problems and more on whether management could make difficult decisions needed to address them within the group's governance structure.
The newly approved plan provides some evidence that it can. Its core restructuring targets remain largely intact, including about 50,000 workforce reductions by 2030 and plans to streamline the company's portfolio and businesses by roughly one-third.
Volkswagen also intends to make greater use of China as an export hub for the Global South, with management maintaining its focus on margins, free cash flow, capital efficiency and competitiveness.
German manufacturing remains a key challenge. Volkswagen has acknowledged about 500,000 units of excess European production capacity, with plants in Emden, Zwickau, Hannover and Neckarsulm lacking competitive successor allocations beyond 2031-2034.
Rather than immediately closing those facilities, Volkswagen is giving them until June 2027 to reach competitive cost levels and potentially secure future production. Alternative uses are also being assessed.
Plant closures can be among the most expensive restructuring options, but addressing Germany's structural cost disadvantage remains central to a sustainable turnaround. Vehicle production at the affected sites beyond the early 2030s is considered unlikely if their competitiveness does not improve.
The agreement could have implications beyond Volkswagen as European automakers grapple with slower growth, excess manufacturing capacity, Chinese competition and pressure on returns.
Execution is now the main test. The agreement does not resolve Volkswagen's problems by itself, but it addresses a major investor concern by showing that difficult restructuring decisions can win approval.
The bank maintained its Buy rating and €115 price target on Volkswagen, compared with a September 3 closing price of €76.36, implying roughly 51% upside.
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