Volkswagen CEO Warns Automaker's Financial Situation is 'More Than Critical'

Volkswagen Chief Executive Officer Oliver Blume has issued a severe warning regarding the automaker's financial standing, describing the company's current state as ‘more than critical’.

Speaking in an internal interview distributed ahead of staff meetings at key German manufacturing locations in Wolfsburg, Zwickau, and Emden, Blume stated that Volkswagen and the broader German automotive sector are facing the most significant upheaval in their history.

As reported by AFP, the company is currently grappling with an annual overproduction surplus of 500,000 vehicles in Europe, exacerbated by mounting geopolitical pressures, new United States tariffs, operational risks from the Middle East conflict, heavy regulatory burdens, and intense market pressure from Chinese competitors.

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Addressing the prospect of factory shutdowns, Blume clarified that no final decisions have been made, though he reiterated that facilities in Emden, Hannover, Zwickau, and Neckarsulm currently lack a viable path to long-term profitability heading into the 2030s. While emphasising that closing plants remains the last and most expensive option, Volkswagen is exploring alternative industrial uses for impacted sites.

Blume stressed that the company's current profit levels are insufficient to fund the long-term investments required for new technologies, future product development, and facility maintenance, warning that global risks are likely to deteriorate further.

To stabilise financial performance, Volkswagen has already targeted a workforce reduction of 50,000 employees, with exit agreements already finalised for 37,000 workers. However, broader cost-cutting proposals presented to the supervisory board in July met resistance from key shareholders, including the Lower Saxony state government, which holds a 20% voting stake.