Volkswagen CEO Oliver Blume is facing what may be the defining moment of his tenure this week, as he attempts to convince the German automaker’s supervisory board to approve a sweeping round of job cuts and factory closures aimed at keeping pace with fast-moving Chinese competitors.
Board members are set to gather at the company’s headquarters in Wolfsburg on July 9 to weigh what analysts are calling potentially the most sweeping structural transformation in the history of the world’s second-largest automaker.
The proposed overhaul faces fierce resistance from unions and key shareholders who hold enough influence to block it. If it moves forward, it would represent a turning point for Blume, 58, as Volkswagen grapples with growing pressure from Chinese rivals, shrinking profit margins, and heavy tariffs on vehicles entering the United States.
“He has to get this done. With the market becoming hyper competitive there is no other option,” said independent auto analyst Matthias Schmidt, who put Blume’s odds of success at 50-50. Schmidt suggested a possible middle-ground outcome involving the closure of two of the four proposed plants rather than all four.
According to sources familiar with the plan, it calls for significant cost reductions, the closure of four factories, and approximately 50,000 additional job cuts — a scope that goes well beyond a restructuring deal reached less than two years ago. Those cuts would come on top of 50,000 reductions already planned across the broader group, highlighting the mounting pressure on Blume to pursue deeper change at Europe’s top automaker by sales volume. The company’s shares are currently trading near their lowest levels in 16 years.
The 2024 restructuring agreement — which called for eliminating 35,000 positions by 2030 — was seen at the time as a win for unions, since it avoided factory closures and forced layoffs until the end of the decade.
Blume is also feeling pressure from Porsche SE, Volkswagen’s largest investor, which has absorbed tens of billions of euros in writedowns tied to its core stake in the automaker. Porsche SE has argued that cost-cutting measures alone are insufficient and that the company’s overall business model needs to be rethought.
The broader challenge reflects a longstanding tension at Volkswagen: unions hold no ownership stake in the company, yet they carry substantial sway over major strategic decisions through their representation on the supervisory board. That dynamic has proven costly for previous leaders — union opposition played a key role in ending the tenures of both Herbert Diess in 2022 and Bernd Pischetsrieder in 2006.
“Blume is simply the one who’s in charge now, so it’s fair to hold him accountable for the strategies he proposes and whether they’re effective,” said Marc Liebscher of SdK, a group that represents smaller Volkswagen shareholders. “Cost cuts are not a strategy… They’re just delaying the inevitable decline.”
Blume, who took over as CEO in September 2022, has built a reputation for seeking compromise and managing the competing interests of Volkswagen’s many stakeholders — including the Porsche and Piech families, the nation of Qatar, and the German state of Lower Saxony.
His task has grown more complicated following the unexpected resignation last month of shareholder representative Susanne Wiegand from the supervisory board. Her departure left labor representatives holding 10 of the board’s 19 seats, which effectively strips Chairman Hans Dieter Poetsch of his ability to cast a tiebreaking vote — a power he can only use when shareholder and labor sides are deadlocked.
“Without the labor union, you can’t take any action,” said German automotive industry analyst Ferdinand Dudenhoeffer, who described the core problem as a clash between higher-cost German manufacturing and cheaper, more agile production operations in China. “VW has to be reformed, but the biggest problem of VW is Germany. This is a pretty serious problem and the question is whether the future of VW lies in Wolfsburg or Anhui (province in China),” he added.
Hendrik Schmidt of DWS, one of the ten largest shareholders in the company, called for a harder look at Volkswagen’s portfolio of brands and suggested that Blume has been too consumed by managing crises to focus on the company’s long-term direction. Even so, Schmidt noted that the controlling families believe replacing Blume at this moment would only create more turmoil. “So whilst they may be watching the way forward with gritted teeth, they are also aware that there are no immediate alternatives at this stage,” he said.
