VW CEO calls companys situation "more than critical" as 3.8% margin falls short of investment needs

Volkswagen CEO Oliver Blume described the company’s situation as “more than critical” in an internal interview published on the automaker’s intranet, according to reports by dpa and other outlets .

Blume stated that while Volkswagen remains operational, it faces urgent action to address financial and structural challenges. The company’s current 3.8 percent operating margin is “solid but far from sufficient” to fund long-term investments in new technologies, products, and plants, he said . Costs remain over 30 percent higher than those of key competitors, and the company’s production capacity in Europe exceeds demand, particularly at four German plants: Emden, Hannover, Zwickau, and Neckarsulm .

The CEO reiterated that no decision has been made on plant closures, though he acknowledged that some sites lack a competitive production plan for the 2030s. “A missing successor allocation is not yet a plant closure,” Blume said, adding that shutdowns would be a “last and most expensive solution” . He emphasized that Volkswagen would seek alternative solutions, such as partnerships or new industrial models, if internal efforts fall short.

Blume had previously signaled a sharp acceleration of cost-cutting measures, with reports suggesting up to 50,000 jobs could be at risk globally. However, he clarified that this figure is not a fixed target but an indication of the scale of restructuring needed to match competitors’ efficiency . Last year, Volkswagen reduced factory costs in its German plants by an average of 20 percent, but Blume said these savings are insufficient .

The company’s supervisory board, where German labor unions hold significant influence, previously rejected proposals to close four German plants and cut nearly 100,000 jobs . Blume is scheduled to address employees at nine works meetings across Germany, beginning in Wolfsburg on Aug. 25 and concluding in Hannover on Aug. 31 . The supervisory board is set to reconvene on Sept. 4 to continue negotiations on the restructuring plan .

Volkswagen has also announced plans to significantly reduce its model lineup and further cut production capacity . External pressures include declining profits in China, aggressive expansion by Chinese automakers in Europe, and U.S. import tariffs .