VW CEO calls situation ‘more than critical’ as 50,000 jobs face the ax

Volkswagen CEO Oliver Blume warned on Friday that Europe's largest automaker faces a "more than critical" situation, signaling that sweeping job cuts and structural overhauls are needed as the company confronts intensifying competition and declining profitability.

Scale of the Crisis

In an internal memo seen by Reuters, Blume said the company's overhead costs remain more than 30% higher than those of comparable automakers and that the frequently cited figure of around 50,000 additional job cuts worldwide "is not a fixed target" but stems from Volkswagen's cost objectives relative to competitors and "serves as an indicator of the scale of action required." If enacted, the cuts would effectively double the group's already-planned layoffs.theedgemalaysia+1

Blume acknowledged that the company's current operating margin of less than 4% is solid given the challenging environment but "is by no means sufficient to generate enough funds in the long term for new technologies, new products and our sites." Cost-reduction measures already underway, including an average 20% reduction in factory costs at German car plants last year, are "not yet sufficient," he added.finance.yahoo+1

Competitive Pressures Mount

Volkswagen is being squeezed on multiple fronts: aggressive Chinese competitors expanding into Europe, weakening financial performance in China, and U.S. import tariffs. Four German plants — in Emden, Hannover, Zwickau, and Neckarsulm — are not expected to reach competitive capacity utilization even in the 2030s, though Blume stressed no final decisions have been made on specific closures.mezha+1

The restructuring, described as the largest in Volkswagen's history, could also include the carve-out of certain divisions. The company's controlling families earlier this month increased pressure on all stakeholders, demanding dramatic action.theedgemalaysia

What Comes Next

Blume will tour at-risk Volkswagen plants next week, and the supervisory board is scheduled to meet on September 4 to continue discussions on the turnaround plans. A series of nine works meetings begins in Wolfsburg on August 25, with stops in Emden, Zwickau, and other sites through August 31, where management will address employee questions amid widespread anxiety over the company's future.finance.yahoo+1