Volkswagen Oliver Blume: "We need to adjust capacities to reality"

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Cost pressure, competition, and the e-car slump: Volkswagen is undergoing a transformation. Why CEO Oliver Blume still sees opportunities – and why his dual role as Porsche CEO is not meant to last forever.

The raw figures from the Volkswagen Group sound sober, almost technical – yet they mark a significant cut: In light of the crisis in the automotive industry, more than 35,000 jobs are set to be cut at the core brand, 7,500 at Audi, and around 4,000 at Porsche. Additional savings plans are being implemented at other brands and subsidiaries. "We're making good progress with this," says Group CEO Oliver Blume in an interview with the German Press Agency.

What sounds like sober efficiency represents an industry undergoing radical reorganization. Blume, who has been leading both the sports car manufacturer Porsche and the VW Group for three years, speaks of "turbulent times." After years of growth and bloated structures, the German automotive industry may be facing the toughest phase in its history: the sector is struggling with a slump in sales, growing competition from China, and challenges in the transition to electromobility. Added to this are EU climate protection requirements for lower CO2 emissions and tariffs in the U.S. market.

A Billion-Dollar Corporation on a Diet

"We need to adjust capacities to reality," says Blume. Sales in the European market have dropped by a good fifth over the past five years. "We are gradually adjusting our capacities. For example, at the Volkswagen brand, by over 700,000 vehicles per year."

The weakness of the domestic market is compounded by tough price competition in China. However, manufacturers from the People's Republic are not stopping there – they are also challenging German carmakers in Europe. Additionally, high investments in the transformation are a burden – along with the fact that electric cars have so far sold worse than expected. When they do sell, they often yield less profit because, among other factors, batteries have to be purchased at high costs.

In the Wolfsburg empire, the response includes new models – and drastic measures. Entire production lines are being reviewed, administrative structures streamlined, and development processes reorganized. "Cost management is crucial to securing a successful future for this company," says Blume. The financial pressure is high: although the Group's revenue was nearly at the previous year's level in the first half of the year, profit plunged by over 38 percent. Whether the cost-cutting plans will be sufficient or are just the beginning remains unclear.

Industry: There Is a Lack of Competitiveness

The transformation also holds symbolic significance for the industrial location. For decades, Germany was considered the cradle of automotive value creation: development, production, and export took place here – with high quality and high wages. In 2024, the heavily export-oriented automotive industry supported 770,000 jobs and generated an annual revenue of over 540 billion euros. And the VW Group is right at the center. A "tanker" – large, complex, with many brands and levels of co-determination. This, too, exemplifies Germany as a location these days.

Industry representatives primarily complain about the high energy and labor costs, the comparatively high taxes worldwide, and the bureaucracy. The president of the German Association of the Automotive Industry, Hildegard Müller, recently stated that the production location lacks international competitiveness.

Affordable E-Models Are Not Built in Germany

The new, more affordable electric compact cars, on which the Group is placing great hopes, especially in Europe, will not be manufactured in the main plant for cost reasons but rather in Spain. Among them is the ID. Polo, with price lists expected to start at just under 25,000 euros. The even more affordable ID. Every1, announced for 2027 at a price of 20,000 euros, will also be built on the Iberian Peninsula: in Portugal. These plants "can absolutely compete with factory costs in Eastern Europe – and even with many Chinese factories," says Blume.

The VW CEO does not write off Germany: looking ahead, he sees great opportunities. "Technologies are evolving – and in Germany, we have very motivated, highly qualified people and excellent vocational training," says Blume. "It’s in our own hands to bring our country back to its former strength. This is always a collective task for politics, businesses, and society." At the same time, he is convinced that Europe must appropriately support its own market.

Double Burden for Blume

The many challenges within the VW Group are also a personal endurance test for Blume. Backed by the billionaire Porsche and Piëch families, the manager has been operating in a dual role for over three years. When the supervisory board appointed him VW CEO in 2022, he retained his leadership position at Porsche. Since the subsidiary's IPO shortly thereafter, he has been CEO of two major publicly listed companies – currently a unique constellation in the German business landscape.

Already back then, when the Stuttgart-based company was reporting one success after another and contributing a significant portion of the Group's profits, the workload must have been enormous. Now, however, things are no longer running smoothly for the Swabians either. "The luxury market in China has completely collapsed," says Blume. A quarter of Porsche's previous total volume has been lost as a result. Additionally, U.S. tariffs and the sluggish ramp-up of e-mobility are weighing on the sports car manufacturer.

Porsche has therefore had a turbulent year: the ambitious electric targets were scrapped – along with the planned battery production. New electric models have also been postponed. In light of the "market realities and customer needs," a combustion engine comeback is now expected to carry the company well into the next decade. These measures are costing the sports car manufacturer billions. The managers in Zuffenhausen will likely be relieved if they can close the year with black figures in the books.

Therefore, further savings are planned. A second package is currently being negotiated between the company and employee representatives. According to dpa information, this is likely to include additional job cuts as well as discussions on job security. The board has also been reshuffled multiple times recently – and to top it all off, Porsche was removed from the German stock index DAX three years after its spectacular IPO.

"Dual role is not designed to last forever"

Investors have long accused Blume of being a "part-time CEO." In light of the crisis, critical voices are growing louder. Blume countered this again in an interview: "This dual role was deliberately chosen," said the top manager. The restructuring of the Group offers enormous advantages: "To take responsibility for technology and processes in one company, to be deeply involved in the operational business. And, additionally, to make the right strategic decisions at the overarching Volkswagen Group level."

How long Blume intends to hold both top positions remains unclear: "I have always said: My dual role is not designed to last forever." The generational change in Porsche's board has already been consciously initiated. It had been prepared in the long term. "In the end, it is the supervisory boards that decide (...) on the matter of the dual role."

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