VW CEO Blume Warns Staff: “The Situation Is More Than Critical” Amid Brutal Cost Cuts

Volkswagen Group CEO Oliver Blume has delivered a stark warning to employees in an internal memo, describing the company’s situation as “more than critical” as it braces for sweeping restructuring. The memo, obtained by Reuters, highlights a cost structure that is over 30 percent higher than rivals, leaving VW at a severe competitive disadvantage amid intensifying global competition, particularly from Chinese automakers. Blume emphasized that the frequently cited figure of 50,000 additional job cuts worldwide is not a fixed target but rather a theoretical benchmark to illustrate the scale of the cost gap VW must close without altering labor costs. The operating margin currently sits below four percent, which Blume acknowledges is respectable under current market conditions but insufficient to fund future investments sustainably. The memo also addressed concerns about four German plants—Zwickau, Emden, Hanover, and Neckarsulm—whose futures remain uncertain beyond the 2030s. While no decisions have been made to shutter these facilities, Blume warned that underutilization could force changes over the next decade. Beyond potential job cuts and factory closures, VW is streamlining its operations by reducing its model lineup by up to 50 percent and slashing available options by 75 percent. The goal is to address the company’s bloated complexity, which has eroded profitability. Blume’s warning underscores the urgency of VW’s transformation, as the automaker faces some of the toughest competition in its history and struggles to make its vehicles profitable enough to secure its future.