Volkswagen CEO Warns Company Is in ‘More Than Critical’ Situation, Huge Job Cuts Loom

Volkswagen CEO Oliver Blume has warned that the automaker is facing a “more than critical” situation as Germany’s automotive industry confronts major challenges from global competition, changing market conditions and increasing pressure from Chinese carmakers.

Blume is expected to meet employees at Volkswagen's headquarters in Wolfsburg, as well as at sites in Zwickau and Emden, to discuss the company's cost-saving plans and the future of its operations.

Volkswagen Faces Major Industry Challenges

In an interview published on Volkswagen's intranet and shared with AFP, Blume said the company and Germany's wider automotive industry were experiencing what he described as the biggest upheaval in their history.

He pointed to global economic pressures and intensifying competition from China as major challenges facing Volkswagen.

The company is now reviewing ways to reduce costs and address excess production capacity across Europe.

Huge Job Cuts Being Considered

Volkswagen is weighing significant job reductions as part of its restructuring efforts.

The company has already planned around 50,000 job cuts, with agreements reportedly reached covering approximately 37,000 employees, according to Blume.

The latest discussions are focused on how Volkswagen can reduce costs while maintaining its competitiveness in an increasingly difficult market.

Plant Closures Remain a Concern

Blume said no final decision had been made on closing Volkswagen plants. However, he reiterated concerns about the long-term profitability of several facilities.

According to the CEO, Volkswagen currently sees no clear path for plants in Emden, Hannover, Zwickau and Neckarsulm to remain profitable into the 2030s under current conditions.

He stressed that shutting factories would be considered only as a last and expensive option.

Volkswagen Faces Overproduction in Europe

Another major issue for Volkswagen is excess manufacturing capacity.

Blume said the company is dealing with the overproduction of around 500,000 vehicles every year in Europe.

The imbalance between production capacity and market demand has added pressure to Volkswagen's finances and increased the need for restructuring.

Alternative Uses for Some Factories

Volkswagen is also exploring alternative industrial uses for facilities where vehicle production could eventually stop.

Blume pointed to advanced discussions with companies in the defence industry regarding the possible use of Volkswagen's factory in Osnabrueck for other industrial activities.

The approach could allow the company to preserve some industrial capacity and employment even if traditional vehicle production is reduced.

Cost-Saving Plan Faces Shareholder Pressure

In July, Blume presented Volkswagen's proposed savings measures to the company's supervisory board, but no final decision was reached.

German media reported that the Lower Saxony state government, a major shareholder in Volkswagen Group with 20% of the voting rights, had not approved the plans at the time.

The disagreement highlights the challenges Volkswagen faces in reaching consensus over the scale and pace of its restructuring.