Volkswagen CEO warns carmaker is 'more than critical'

Volkswagen CEO Oliver Blume has warned that the company is in a “more than critical” state as he prepares to defend savings plans in meetings with staff.

Blume said in an interview posted on Volkswagen's intranet that the carmaker and the wider German auto industry face “the biggest upheaval in their history” because of global pressures and Chinese competition.

Volkswagen is weighing large job cuts. Blume is due to meet employees in coming days at the company's headquarters in Wolfsburg and at sites in Zwickau and Emden to give updates on the plans.

Blume said no decision had been taken on plant closures. But he repeated the company's view that it cannot currently see a way for plants in Emden, Hannover, Zwickau and Neckarsulm to remain profitable in the 2030s.

He said Volkswagen also has over-production of 500,000 vehicles a year in Europe. Factory closures would be “the last and most expensive solution,” he said.

Blume said Volkswagen is looking at other industrial uses for sites where car production may stop, including advanced talks with defence companies over the Osnabrueck factory.

He said the company also faced US tariffs, the war in the Middle East and regulatory burdens. Asked whether he expected conditions to improve, Blume said Volkswagen had to assume that worldwide risks would worsen.

Blume said Volkswagen's current profit level was not enough to secure long-term funding for new technologies, new products and company locations.

In July, Blume presented savings plans to Volkswagen's supervisory board, but no decision was taken. German media reported that the Lower Saxony state government, a major shareholder in Volkswagen Group with 20 percent of voting rights, refused to approve the plans.

The group has already ordered 50,000 job cuts, and Blume said agreements have been reached with 37,000 employees. He appealed to employees to back the plan.

IG Metall union head Christiane Benner criticised management on Friday and said the union would resist factory closures.