Volkswagen's Position is ‘More Than Critical’: VW CEO

Volkswagen is in a “more than critical” position as Germany’s car industry confronts what its chief executive has described as the biggest upheaval in its history.

Oliver Blume issued the warning ahead of meetings with employees where he is expected to defend a savings program that could reshape the group’s workforce and manufacturing footprint.

Industry Under Pressure

Blume said Volkswagen and the wider German automotive sector were facing “the biggest upheaval in their history,” pointing to global pressures and intensifying Chinese competition.

The company is considering substantial job reductions as it seeks to adjust its cost base and production network.

Blume is due to meet employees at Volkswagen’s headquarters in Wolfsburg as well as plants in Zwickau and Emden to provide updates on the plans.

Plants Face Long-Term Questions

Blume said no decision has yet been taken on factory closures.

But he repeated Volkswagen’s assessment that its facilities in Emden, Hannover, Zwickau and Neckarsulm currently lack a clear path to remaining profitable during the 2030s.

Factory closures would remain “the last and most expensive solution,” he said.

Volkswagen is instead examining alternative industrial uses for sites where vehicle production could end.

Blume pointed to advanced discussions with defense companies over possible use of the group’s Osnabrueck plant.

Excess European Capacity

The company is also grappling with annual overproduction of about 500,000 vehicles in Europe, Blume said.

That excess capacity has become central to the pressure on Volkswagen as management seeks further savings.

Blume presented cost-cutting proposals to the supervisory board in July, although no decision was reached.

German media reported at the time that the Lower Saxony state government, which holds 20 percent of the group’s voting rights, had declined to approve the plans.

Job Cuts Already Under Way

Volkswagen has already ordered 50,000 job reductions. Blume said it had reached agreements with 37,000 employees.

He urged staff to support the wider restructuring effort.

“We will only be successful if everyone in the company supports this plan,” Blume said.

Union Resistance Builds

Management is also facing opposition from labor representatives.

Christiane Benner, head of the IG Metall union, sharply criticized Volkswagen’s leadership on Friday and pledged to resist factory closures.

Volkswagen employees had already been required to accept significant cuts and were now receiving “another slap in the face,” she told the Wirtschaftswoche weekly.