00:00I was just looking through the numbers, looking at your operating margins, which came a little
00:03bit below estimates. Same thing with profit, but you're still maintaining your full year guidance
00:08in terms of the margin, despite the fact that you're seeing revenue coming down.
00:13How are you going to hit those margins, just given those conditions and that outlook?
00:18Yeah, good morning, Oliver. Good to see you again. Look, in the second quarter, the trend
00:23from the first quarter continued. Yeah, we made progress on various fields. We brought
00:28new cars to the customer, specifically an exciting new electric urban car family. We make
00:34all the progress on cost and productivity. And then this is also reflected in our cash flow.
00:40But you're right. The industry is, the situation in the industry is weighing on our margin.
00:47And in the long term, 3.8 percent or 4 percent after adjustment is clearly not enough.
00:54If you talk about the year 2026, we kept our guidance outlook because we have some tailwind
01:01in the second quarter, specifically product momentum at Audi. Audi expects some very exciting
01:08new models in the second half of the year. And we also expect some tailwind on the continuous
01:15cost work we implemented two years ago. We started two years ago.
01:20And based on these factors, we keep our outlook.
01:26Yeah. And so we've talked about cost for a very long time, Arno, over the last couple of years.
01:31And here in your earnings statement, in the quote that they have of yours, the currently
01:34planned initiatives you say are not sufficient. One of the big initiatives that there is a lot
01:39of discussion about at Volkswagen are the question of job cuts, are the question of potentially
01:43factory closures. Will you be able to reach the targets on cost? Will you be able to do what's
01:49necessary on cost without cutting jobs, without closing factories?
01:55Well, let me elaborate a little bit on the situation where we are. There are a lot of
02:00figures out there. Look, we decided on a first restructuring package, I would say, 2024,
02:07late 2024, which incurs about a drop reduction of 50,000 in Germany, which includes like taking out capacity of
02:18about a million and the contribution on the wage side.
02:21But since then, the situation has completely changed.
02:25The tariffs were introduced, which burdens us by four to five billion. We see much more intense competition in China
02:32and Chinese competitors are exporting not only cars, but also competitive pressure to Europe.
02:39In this situation, we need to step up our efforts and do more fundamental restructuring. And this is what we
02:46are talking about in the transformation program. We have some elements on the cost side and on the customer side.
02:53And this package should enable us to move into the future with strength and with confidence.
03:05But I want to get a little bit more into that question of job cuts. I know that there are
03:08currently very sensitive and very complicated conversations happening with the unions. But are we reaching a point now where there's
03:15a more serious conversation that Volkswagen needs to have? One that sounds something like the dependent, the future of this
03:21company, the existence of the company is dependent on being able to get those cuts through. Is that the message
03:26to the unions?
03:29Look, we have great products, but the costs are too high, as I just mentioned. And we have various elements
03:36of these costs. First and foremost, we still have an overhead cost gap to competition in the magnitude of about
03:4330 percent.
03:45And closing this overhead cost gap until 2030 would mean lowering the overhead cost by 10 to 11 billion. This
03:55is one element. And another element is productivity and competitiveness of our plants.
04:02We have to increase efficiency in the plants, but we still have over capacity and it's very hard to face
04:11competition with underutilized plants. So this is the second element of the program.
04:15There's a broad understanding in the company that we have to address these topics in order to move successfully into
04:21the future.
04:22This is a field of section.
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