RIP Volkswagen? The downfall of a German giant
RIP Volkswagen? The downfall of a German giant.
Oliver Blume, the 58-year-old chief executive of Volkswagen Group, has lived and breathed the mighty German car industry for three decades.
After training as an engineer, he began his career in the body shop of Audi, honing his skills at a time when German cars were still the first and last word in automotive excellence.
He surely couldn't have imagined, or wanted, his stellar VW trajectory to end up like it did last week.
After rising through the ranks via Audi, SEAT and Porsche, there was Blume warning his staff of job cuts and factory closures and fighting with politicians and union bosses.
But he has no choice. In its 90th year, VW faces an existential threat.
For decades, VW has ridden on the coat-tails of a rising China. The Chinese bought Volkswagens, Audis and Porsches in their millions, swelling the company's profits and seemingly securing the future.
Chinese carmakers came of age, and their cheap and sophisticated electric vehicles blew the Germans away – first in China and now, increasingly, everywhere else.
In the past three months, VW's sales in China have collapsed by more than one third from the same period last year.
"In automotive terms, the changes have happened in the blink of an eye," says Tu Le, founder of the US consultancy Sino Auto Insights.
"All the Germans – BMW, Mercedes, VW Group, including Porsche and Audi – they're all still trying to find a bottom. The worst is still in front of them, from the standpoint of how much further their sales can shrink."
The German carmakers have been slow to react. Rather than steer away from the abyss, they are teetering on its edge. And Blume, at the wheel of VW, can see over the precipice.
"Europe is under massive economic and geopolitical pressure. Germany, as an export nation, is particularly affected," the chief executive told his staff in a memo. "And in the automotive industry, the challenges appear as if under a magnifying glass."
VW's 650,000-plus headcount was "no longer sustainable", Blume said. Workers face an invidious choice: take pay cuts all round, or 50,000 of them will have to lose their jobs , on top of a similar-sized cull announced last year.
Factories in Emden, Hanover, Zwickau and Neckarsulm, which churn out some 750,000 cars a year, are under threat of closure.
The chief executive said he was still holding out for "smart solutions" to keep these plants running. This might involve turning some of them over to Germany's booming defence industry – an idea that has already proved controversial.
Blume's aim is to save VW. Yet his plans have stoked enmity on the carmaker's board, where half the 20 members are staff representatives and two are politicians from the company's home state of Lower Saxony.
The company's works council, which supplies the employee members to the board, says "virtually nothing" remains of the trust and goodwill that the chief executive started with back in 2022.
Members reportedly rejected his restructuring plan last week by 12 votes to seven. Meanwhile, staff unrest is brewing, and may soon come to a head.
