Oliver Blume Says German Auto Industry Faces Historic Upheaval
Volkswagen CEO Oliver Blume has issued one of his strongest warnings yet about the company’s financial and competitive position, describing the situation at Europe’s largest carmaker as “more than critical”.
His comments come ahead of a series of meetings with Volkswagen employees in Germany, where management will attempt to explain and defend a sweeping restructuring and cost-cutting programme.
Blume said Volkswagen and Germany’s wider automotive industry were experiencing what he described as the biggest upheaval in their history, driven by weaker markets, aggressive Chinese competition, falling profitability in China and trade barriers affecting exports to the United States.
Volkswagen is currently undertaking what could become one of the most extensive restructuring programmes in its history.
The company has already agreed to eliminate around 50,000 positions across Volkswagen, Audi, Porsche and software subsidiary Cariad in Germany by 2030.
Volkswagen says around 37,000 employees have already signed agreements under that programme, largely through voluntary departures and partial early-retirement arrangements.
Management is also examining whether further reductions could be required.
Blume has said a frequently discussed figure of another 50,000 positions worldwide is not a fixed job-cut target, but rather an indication of the scale of action that could be necessary if labour and overhead costs cannot otherwise be reduced to competitive levels.
Four German Plants Face Uncertain Future Beyond 2030
Concern among workers has intensified because Volkswagen has yet to secure a competitive long-term future for several major German factories.
Blume said no decision had been made to close specific plants.
However, he acknowledged that Volkswagen currently cannot identify sufficiently competitive future production assignments for its facilities in Emden, Hannover, Zwickau and Neckarsulm during the 2030s.
That does not mean the plants have formally been scheduled for closure.
Blume stressed that losing future vehicle production does not automatically mean a factory must shut down.
Instead, Volkswagen says it is examining alternatives involving outside investors, industrial partners or entirely new uses for manufacturing sites.
One prominent example is the company’s Osnabrück plant, where Volkswagen says it is in advanced discussions with companies from the defence industry about possible future industrial activity.
Blume described factory closures as the last and most expensive option available to the company.
Management says it would prefer to find alternative industrial uses capable of protecting employment where traditional vehicle production can no longer be economically justified.
The pressure is particularly serious because Volkswagen says it is carrying major excess manufacturing capacity in Europe.
Blume has referred to approximately 500,000 vehicles of excess annual production capacity, meaning the company has facilities capable of producing considerably more vehicles than it currently expects to sell.
Excess capacity raises costs because factories, equipment and personnel must still be financed even when production volumes fall below optimal levels.
Costs Remain Far Above Rivals as Chinese Competition Intensifies
Cost competitiveness has become a central problem for Volkswagen.
Blume said Volkswagen’s overhead expenses remain more than 30% above those of comparable competitors, according to a recent internal interview reported by Reuters.
Those costs include administration, infrastructure and other support operations surrounding the company’s core manufacturing business.
Volkswagen’s operating margins are currently below 4%, which Blume said may be respectable given difficult market conditions but are not sufficient to finance the company’s long-term investments in new technologies, products and factories.
The German manufacturer is simultaneously being forced to invest heavily in electric vehicles, batteries, software and new technology while facing stronger Chinese rivals.
Chinese brands are expanding rapidly in Europe and competing aggressively on price, software, battery technology and electric vehicles.
Volkswagen has also faced declining profitability in China, historically one of its most important markets.
At the same time, tariffs in the United States have added another financial burden to the group’s international operations.
Blume argues that these pressures mean Volkswagen can no longer operate with the cost structure it built during a period when European automakers enjoyed stronger global market positions.
Workers Prepare to Question Management Over Restructuring
The CEO will now face Volkswagen employees directly.
A series of extraordinary staff meetings is scheduled across the company’s German operations.
Blume is expected to appear at Volkswagen’s headquarters in Wolfsburg on August 25, followed by meetings in Emden and Zwickau on August 26.
Further employee meetings are planned at locations including Hannover, Braunschweig, Salzgitter, Dresden, Chemnitz and Kassel-Baunatal before the end of August.
The meetings come amid deep uncertainty over job security and the future of several plants.
Volkswagen’s powerful works council has warned that the combination of existing job reductions, possible additional cuts and uncertainty over factories could ultimately affect tens of thousands more employees.
Reuters reported last month that worker representatives estimated as many as 140,000 positions could potentially be affected when existing reductions, possible additional workforce cuts and jobs connected to threatened factories are considered together.
Volkswagen has not formally confirmed that figure.
IG Metall Vows to Fight Factory Closures
German trade union IG Metall has strongly criticised management’s latest plans.
Union chair Christiane Benner, who also serves as deputy chair of Volkswagen’s supervisory board, said workers had already accepted substantial sacrifices under earlier restructuring measures.
She argued that demands for further cuts amounted to another major blow for employees.
Benner has also questioned whether management’s profitability targets are realistic under current geopolitical and economic conditions.
IG Metall has made clear that it intends to resist factory closures and further measures it believes would place a disproportionate burden on employees.
Volkswagen’s governance structure gives worker representatives considerable influence.
The German state of Lower Saxony is also an important shareholder and controls 20% of Volkswagen’s voting rights, making major restructuring decisions politically sensitive as well as economically difficult.
Reports said Blume presented cost-saving proposals to Volkswagen’s supervisory board in July, but no final agreement on the most controversial parts of the restructuring was reached.
Volkswagen Says Support From Entire Workforce Is Essential
Despite resistance, Blume has insisted that significant changes are unavoidable if Volkswagen is to remain internationally competitive.
The company says manufacturing costs at its German plants have already fallen substantially, with factory costs reduced by more than 20% on average during 2025.
Volkswagen is targeting more than €6 billion in annual net cost savings by 2030 across the group through workforce reductions, production adjustments and other efficiency measures.
Blume has argued that restructuring is intended not simply to cut costs but to ensure Volkswagen has enough financial strength to invest in future electric vehicles, software and technology.
The CEO has appealed for employees, managers and other stakeholders to support the transformation.
However, the coming weeks are likely to determine whether management can win enough backing for its restructuring strategy.
With Chinese competitors advancing, European factories operating below capacity and unions resisting deeper cuts, Volkswagen faces difficult choices over jobs, plants and investment.
For one of Germany’s most important industrial companies, Blume’s warning underlines the scale of the challenge: Volkswagen must reduce costs dramatically while simultaneously investing enough to remain competitive in a rapidly changing global auto industry.
