Volkswagen Group CEO claims that Volkswagen cannot proceed as before
Date
9/18/2024 8:28:53 AM
(MENAFN) Volkswagen Group CEO Oliver Blume has emphasized the urgent need for significant changes within the company if it aims to navigate the current economic landscape successfully. In an interview with the Bild newspaper, Blume acknowledged that the situation is dire enough that the company cannot maintain its traditional operations.
This statement comes on the heels of recent announcements indicating that Volkswagen, the largest car manufacturer in the European Union, is considering closing at least two factories in Germany—a move that would mark a historic first for the automaker in its nearly 90-year history. Blume defended these plans for substantial cost-cutting measures, underscoring the seriousness of the economic challenges the company is facing.
Volkswagen's operating profit saw a notable decline, dropping by 20 percent in the first quarter of 2024 compared to the same period in the previous year. Earnings continued to falter in the second quarter, with a further decrease of 2.4 percent. To counter these losses, Blume estimated that the proposed job cuts could save the company approximately EUR4 billion (about USD4.25 billion). He mentioned that the board is actively exploring additional strategies to ensure the company’s survival amid a slump in car sales.
The challenges facing Volkswagen and the broader European automotive industry can be traced back to the disruptions caused by the COVID-19 pandemic and the increasing competition from Asian manufacturers. Blume articulated the dilemma succinctly: "The pie is getting smaller, and we have more guests at the table," reflecting the intensified competition in the market.
Volkswagen employs around 120,000 workers in Germany, and the potential cutbacks highlight the company's precarious position as it grapples with fluctuating demand and mounting pressures to adapt. As the automotive landscape evolves, Blume's call for transformative changes is a critical acknowledgment of the need for innovation and strategic shifts to ensure the company's longevity.
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