VW CEO Oliver Blume said that the German car industry has been building on past achievements for too long and, as a result, missed the moment when the global automobile market began to change rapidly. He noted that for decades the business model had been based on developing and producing cars in Germany for the whole world. However, today’s consumers in different regions have more diverse requirements.
At Volkswagen’s annual shareholders meeting, corporate governance was again criticized. Over the year, the company’s shares have fallen in value by almost 25%, partly due to pressure in key markets: tariffs in the US, competition in China and costs in Europe. At the same time, the concern has already warned of the risk of reaching the lower limit of the annual profit forecast.
In addition, Volkswagen AG is actively reducing staff. In December 2024, the company announced plans to cut 35,000 jobs in Germany over five years, cut 1,900 positions at Porsche and 7,500 at Audi, and reduce the size of the software development division by about a third.
But even with this lineup, Volkswagen will remain a much larger entity than most of its competitors. In 2024, the company will have 679,472 employees. Toyota Motor Corp. by comparison had 384,338 employees. In Germany alone, Volkswagen employs 293,338 people – more than Stellantis NV’s total global workforce.
That kind of scale has caused Volkswagen to be referred to as a “slow-sailing tanker.” Nevertheless, the company still hasn’t gone ahead with plant closures.
It still produces many key components on its own (electric motors, gearboxes, axles) and is ramping up production of batteries for electric cars. This is further swelling the workforce. But the management admits: sales in Europe are falling, the company has at least two redundant plants, and the cuts are necessary to compete with Tesla and Chinese automakers.
Oliver Blume said the company plans to ramp up investments in the United States. According to him, the main partner of VW in negotiations is the US Secretary of Commerce Howard Lutnick.
Also, the German auto industry is negotiating with the U.S. on a possible reduction or elimination of import duties, using investments as an argument. VW invested $5.8 billion in the U.S. company Rivian and created more than 20,000 jobs directly and about 55,000 indirectly.
Meanwhile, trade duties imposed during the Trump presidency remain the subject of litigation. Although the U.S. Trade Court previously suspended them, an appeals court temporarily reinstated the 25% tariff on car imports until the process is over.
According to the VDMA survey, the bigger problem for businesses in the US is not so much the size of the duties, but the uncertainty in trade policy.
