Volkswagen Board Rejects Blume Restructuring Plan

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In June, Germany’s Supervisor Magazin reported that Volkswagen Group CEO Oliver Blume had a plan to shut 4 factories in Germany and eradicate 100,000 employees, each in Germany and world wide, by 2030. It stated the plan can be made public at an organization board assembly on July 9. The Volkswagen factories affected have been stated to be these in Hanover, Zwickau, and Emden, in addition to the Audi manufacturing unit in Neckarsulm.

July 9 got here and went, and it now seems that plan didn’t get the approval from the board of administrators that Blume anticipated, which is not any shock since a majority of the 19 member board consists of those that symbolize the pursuits of employees or the state of Decrease Saxony. The vote was 12 in opposition to and solely 7 in favor of Blume’s imaginative and prescient.

What occurs now’s anybody’s guess. Volkswagen is producing extra vehicles than it might probably promote, a scenario that can’t go on indefinitely. It has seen its annual gross sales fall from round 12 million autos to only 9 million. That’s nonetheless a number of vehicles and vans, however the revenue margins on them have fallen as effectively, placing the squeeze on traders.

Deliveries Are Down

Automobile deliveries within the second quarter of this 12 months dropped 8.6 % to 2.07 million, the sharpest quarterly decline in 4 years, bringing first-half world deliveries to 4.12 million, which was down 6.3 % in comparison with the primary half of 2025. In line with Yahoo! Finance, the corporate’s revenue margins are actually solely half of what they have been 5 years in the past, principally on account of a weaker gross sales in China, the prices of changing to electrification, and better tariffs imposed by the US.

IG Metall, Germany’s greatest industrial union, which represents a lot of the meeting line employees employed by Volkswagen Group, organized demonstrations by employees at Volkswagen factories all throughout the nation, calling on administration to place ahead a method that protects manufacturing. That’s to be anticipated, but when prospects should not shopping for your merchandise, that’s an issue. The corporate’s current labor agreements ban strikes, however IG Metall and different unions have warned they may intensify industrial motion ought to administration try to undermine job safety commitments.

In line with sources acquainted with the discussions, the state of Decrease Saxony sought to barter a compromise through the supervisory board’s talks. Volkswagen’s major manufacturing unit is positioned in Wolfsburg, a metropolis in Decrease Saxony, and that state is a serious stockholder within the firm, with illustration on the board of administrators. One supply stated Decrease Saxony had thought-about submitting its personal proposal, however finally deserted the plan with out giving additional element.

Decreasing Overhead

In line with The Guardian, Blume advised the board the corporate “should proceed on this path” of decreasing overhead by 20 % at its factories, together with reducing half of its mannequin lineup — particularly the variants of various manufacturers. The corporate can also be exploring different choices for factories to safe jobs. He stated it was nonetheless in superior discussions concerning the transformation of its manufacturing unit in Osnabrück from automotive to protection manufacturing. Over the weekend, it was reported that Volkswagen had deliberate to make autos for Rafael, an Israeli protection contractor, to guard jobs at Osnabrück. That plan was blocked by the Qatar sovereign wealth fund, which has a ten % stake in Volkswagen AG.

Christiane Benner, the chair of IG Metall, stated the proposals have been unacceptable, significantly because the union had already made concessions. “As an alternative of taking this achievement as a mannequin, the board is confronting staff with new downsizing plans. Understandably, the ensuing anger and uncertainty are immense. We want new concepts and ideas for using plant capability, smart issues from the corporate,” she stated.

Up till the board assembly final week, the plan on the desk was to shutter 4 Volkswagen factories in Germany. In his most detailed clarification of the administration blueprint for the longer term, Blume advised his employees that “regardless of some decidedly controversial choices” on the desk, he had perceived “broad help on the supervisory board” of his evaluation of the group’s future and the necessity for motion.

Employee Protests

Final Thursday, the board spent hours listening to Blume’s proposals whereas employees staged protests at a number of Volkswagen, Audi, and Porsche areas throughout Germany. Requested about employees considerations about jobs, Blume — who positions himself as a Volkswagen insider, having began within the paint store at Porsche at age 28 — stated he was “doing every part in his energy” to maintain the corporate aggressive sufficient to outlive and promised to enter into “constructive discussions” with the employees and the manufacturing employees.

However the place as soon as he was seen as a reliable “firm man,” belief in his management has eroded considerably. On July 11, 2026, the works council distributed a particular version of its newspaper to the workforce, saying that Blume must reply to employees at conferences through the summer season break. This can be a large fall from grace for Blume, wrote Autoblog editor Earl Lee. When he was appointed CEO, after Herbert Diess — who got here from BMW! — was fired moved apart, he was initially considered as being “for the individuals” by the members of the work council. They now not see him as a buddy to labor.

Fewer Staff However Slower Cuts

Earlier than the July 9 assembly, he stated the corporate would shed 100,000 employees over the subsequent 5 to six years. After the assembly, that quantity was trimmed to 50,000 — an initiative he claims is already going down in a “socially accountable method” involving some voluntary redundancy packages and partial retirement preparations. The corporate has already lower 37,000 jobs from the workforce this fashion, however a second section of cuts geared toward decreasing overhead much more was now obligatory, he added.

“Since half of our overhead prices consequence from personnel prices, a theoretical calculation — assuming no change in labor prices — would consequence within the elimination of roughly 50,000 positions worldwide,” Blume stated. He confirmed there was nonetheless a query mark over these 4 factories talked about above — Volkswagen crops in Emden, Hanover, and Zwickau and the Audi manufacturing unit in Neckarsulm.

That final location is scheduled to maintain constructing vehicles till at the very least 2031 and probably as late as 2034. However whether or not it might proceed working as soon as manufacturing of present fashions ends is an open query. Blume stated “good options are all the time higher than closing a plant” however that “Germany can not flip a blind eye” after the automobile market was flooded with vehicles that aren’t wanted, each from China and Europe.

What’s Subsequent?

So what is going to occur at Volkswagen? Your guess is pretty much as good as ours. The corporate appears to haven’t any actual reply to its sharp decline in gross sales in China, which signifies that gravy prepare has come to an finish. Gross sales of recent vehicles all throughout Europe — particularly combustion-powered vehicles — are down considerably. The place Volkswagen manufactured 12 million vehicles a number of years in the past, final 12 months it manufactured 9 million.

One thing’s obtained to present, and a discount within the variety of employees is the plain resolution, as painful as which may be to all involved. For the second, sluggish attrition of the workforce appears the one technique that’s minimally palatable to all involved. So within the absence of any extra grand plans from Oliver Blume, that’s in all probability what is going to occur.

College students of capitalism may very well cheer the travails of Volkswagen as proof that the system is working as supposed. Artistic destruction is a obligatory a part of the capitalist manifesto. However that ignores the monetary and psychic ache visited on those that lent their backs and their brawn to creating Volkswagen one of the vital profitable automobile firms in historical past. Keep tuned. The top of this story has but to be written.