VW CEO Says ‘Smarter Solutions’ Possible Beyond Closing Plants

Oliver Blume Photographer: Angel Garcia/Bloomberg Photo by Angel Garcia /Bloomberg

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(Bloomberg) — Volkswagen AG Chief Executive Officer Oliver Blume said there are “smarter solutions” to save money than shuttering factories and hailed progress already made in cutting costs in remarks that could help defuse tensions with the manufacturer’s powerful union.

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Labor officials have accused Blume of stoking fear in the workforce and demanded he explain himself directly to staff after details of a sweeping restructuring plan, including as many as 100,000 job cuts and plant closures in Germany, were published in the media.

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In an interview in the Sunday edition of Bild newspaper, Blume appeared to rule out shutting factories, saying “there are smarter solutions” for Europe’s biggest carmaker. Last year, VW was able to trim costs at its German facilities by one-fifth on average, he said, calling it “strong progress.”

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“Our products are highly popular, we just aren’t making enough money from them,” Blume told the paper. “That is why we must continue to cut costs — in every area.”

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Without the support of worker representatives, who account for 10 of the seats on the supervisory board, the prospects for the CEO’s restructuring plan are uncertain. It was rejected by 12 of the 19 board members at a meeting Thursday in Wolfsburg, according to local media reports.

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VW’s works council said on Saturday there has “a massive loss of trust” in Blume as a result of the plans leaking out before the board gathered to discuss them. “Virtually nothing” remains of any goodwill he had initially earned among staff after taking over in 2022 and he will have to answer to them at meetings to be held after the summer break, it said.

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After the supervisory board meeting, management outlined only vague goals, including an effort to reduce complexity across its myriad product offerings, with a goal of concentrating the lineup on the most attractive market segments.

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“We are aiming to increase sales volumes per model, which is why we are systematically streamlining our product portfolio,” Blume said in the Bild interview.

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As well as relatively high labor and energy costs and bureaucratic burdens, VW has been grappling with both increased competition and waning demand from China, while US trade tariffs have sapped returns at its luxury Audi and Porsche brands.

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“The environment we operate in has never been as challenging or fraught with risk as it is today, with geopolitical tensions, trade barriers, regulations, market upheavals, and intense competition,” Blume told Bild.

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