Volkswagen chief warns company’s situation ‘more than critical’

Critical Warning and Upcoming Staff Meetings

Volkswagen CEO Oliver Blume described the company's situation as "more than critical" in an interview posted on the company's intranet and sent to AFP. The warning precedes staff meetings in coming days at the carmaker's headquarters in Wolfsburg and sites in Zwickau and Emden, where Blume plans to defend the company's savings plans.

Blume said Volkswagen and the rest of Germany's car industry are facing "the biggest upheaval in their history" due to global headwinds and Chinese competition.

No Decision Yet on Plant Closures

In the interview, Blume said that no decision had been taken on plant closures but reiterated that for plants in Emden, Hannover, Zwickau, and Neckarsulm, "we cannot currently see any way of them remaining profitable in the 2030s." He acknowledged that the company faces overproduction of 500,000 vehicles per year in Europe, but emphasized that closing factories would always be "the last and most expensive solution."

Exploring Industrial Alternatives

Blume mentioned that at sites where car production may stop, Volkswagen is exploring other "industrial solutions," pointing to advanced talks with companies from the defence industry over using its factory in Osnabrueck.

Financial Challenges and External Pressures

Blume also stated that current profit levels are insufficient to "ensure we have the means over the long term for new technologies, new products and our locations." He identified U.S. tariffs, the war in the Middle East, and regulatory hurdles as key challenges, alongside competition in and from China. When asked if the situation might improve, Blume responded, "on the contrary, we have to assume that risks will get worse, worldwide."

Savings Plan and Costs

In July, Blume presented savings plans to Volkswagen's supervisory board, but no decision was taken. German media reported at the time that the Lower Saxony state government, which holds 20 percent of voting rights in the Volkswagen Group, refused to sign off on the plans.

Job Cuts and Union Resistance

The group has already ordered 50,000 job cuts, with agreements reached for 37,000 employees. Blume appealed to employees to support the plan, saying, "We will only be successful if everyone in the company supports this plan."

IG Metall union head Christiane Benner sharply criticized management on Aug 21 and promised resistance to factory closures. Benner's criticism came ahead of Blume's warning, which was reported on Aug 23.