VW cost cutting necessary after 'decades of structural problems', CEO tells paper

BERLIN (Reuters) - Volkswagen's planned cost-cutting programme was unavoidable in order to remedy "decades of structural problems" at the German carmaker, CEO Oliver Blume said in an interview published on Sunday.

"The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW," Blume told Sunday paper Bild am Sonntag.

The head of Volkswagen's works council said last Monday that the carmaker plans to shut at least three factories in Germany, lay off tens of thousands of staff and shrink its remaining plants in Europe's biggest economy as it plots a deeper-than-expected overhaul.

The carmaker has not confirmed those plans but on Wednesday it asked its workers to take a 10% pay cut, arguing it was the only way that Europe's biggest carmaker could save jobs and remain competitive.

Blume said the cost of operating in Germany was a major drag on Volkswagen's competitiveness, telling Bild am Sonntag that "our costs in Germany must be massively reduced."

There was no flexibility on the goals for cost-cutting, only on how they are to be achieved, he said.

The carmaker has set aside around 900 million euros ($975.06 million) in its annual report for executing the measures, according to the paper.

($1 = 0.9230 euros)

(Reporting by Friederike Heine, editing by Susan Fenton)

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