Volkswagen CEO Oliver Blume Warns of Deepening Industry Crisis, Plans Biggest Restructuring in Company History

In an internal memo to employees dated August 21, Volkswagen CEO Oliver Blume warned that the current situation facing the automotive industry is "worse than dire," with challenges set to intensify in the coming years. To maintain its competitiveness and financial stability as Europe’s largest automaker, Volkswagen plans to undertake the biggest restructuring in its history, including significant cost reductions. Potential measures include cutting up to an additional 50,000 jobs and spinning off certain business units. Volkswagen is currently grappling with multiple pressures: Chinese automakers accelerating their entry into the European market, declining profits in China, rising U.S. import tariffs, and longstanding issues in Europe such as high costs and overcapacity—all of which continue to weigh heavily on the company’s profit margins. Blume noted that while the current operating margin of just under 4% remains relatively solid given the existing environment, it is insufficient in the long term to fund investments in new technologies, products, and production facilities. Volkswagen’s supervisory board will reconvene on September 4 to discuss the restructuring plan. The company has not yet formally confirmed the scale of any additional job cuts, but sources previously indicated that if the plan to cut another 50,000 positions materializes, the total number of job reductions across the group would roughly double. Blume emphasized that the widely reported figure of approximately 50,000 global job cuts is not a fixed target, but rather an estimate of the scale of action needed based on benchmarking against competitors’ cost structures.