As Volkswagen continues to deal with tariff impact and rising competition from Chinese carmakers, taking drastic cost-cutting and strategy steps have become all the more crucial to maintain its market position.
Volkswagen’s biggest shareholder, Porsche SE, has called for the German car company to take immediate steps to fight off rising competition from Chinese auto brands. This could be the biggest overhaul in the company’s 89-year history.
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The Porsche and Piëch families together control Volkswagen through their holding company, Porsche SE, which owns around 31.9% of Volkswagen’s equity.
“The Volkswagen Group is at a historic crossroads. The decisions that Volkswagen makes now will determine its future. For the sake of the company and its sustainable competitiveness, everyone must now step up and take responsibility,” Hans Dieter Pötsch, chairman of the board of management of Porsche SE, said in a press release.
Pötsch also emphasised that it is imperative for crucial decisions to be taken as fast as possible, stating that the longer they are delayed, the bigger these issues would become.
He added: “The focus must now be solely on what is necessary from a business and economic perspective. All other considerations must be secondary.”
This includes slashing excess capacity, significantly bolstering the Group’s decision-making and execution, along with considerably reducing costs.
This stance could also mean that Volkswagen may focus less on factors such as labour rights and environmental considerations in the coming months, while it makes profit and restructuring its key focus for now to deal with the current major competition crisis facing its long-term operations.
“Competitiveness is the goal. Every option must be considered in pursuing it. Otherwise Volkswagen risks permanently losing ground to its international competitors,” Dr. Johannes Lattwein, member of the board of management responsible for finance and IT, also said in the press release.
Volkswagen’s shares were up 0.6% on Friday afternoon, but have fallen more than 27% so far this year.
Volkswagen on the brink of major restructuring
The company has already confirmed that it is considering slashing up to 100,000 jobs, in order to deal with lagging profit. This is twice as many as previously communicated.
The move comes amid intense tariff pressure, amounting to billions of euros along with soaring competition from Chinese carmakers, especially electric vehicle brands like BYD, Geely and SAIC.
This is both in the domestic Chinese market, where legacy models have lost ground to fast-moving Chinese EVs, as well as in the European, Latin American and African markets too, where affordable Chinese models continue to see considerable growth.
In another attempt to diversify and build resilience, Volkswagen is also looking into various options to better increase productivity and boost its plants’ capacity utilisation.
