Volkswagen faces ‘more than critical’ crisis, warns carmaker’s boss

Louis GossMon, August 24, 2026 at 11:44 AM UTC

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Oliver Blume, the chief executive of Volkswagen, says ‘we are in the biggest transformation in the history of the global automotive industry’ - Krisztian Bocsi/Bloomberg

Volkswagen’s chief executive has warned that the crisis facing the German carmaker is “more than critical”, urging employees to brace for “the biggest upheaval in their history”.

Oliver Blume said US tariffs, the war in the Middle East and mounting competition from China had all contributed to a downturn that threatens to worsen in the coming years.

In an internal memo seen by The Telegraph, he said that Volkswagen’s current profits were “by no means sufficient” for it to continue investing in “new technologies, new products and our locations”.

He added that “we have to assume that risks will get worse, worldwide”, claiming that “we are in the biggest transformation in the history of the global automotive industry”.

His comments form part of efforts to win over staff as part of a controversial turnaround plan, which could include closing four of its German factories and laying off as many as 100,000 workers.

The company’s brands include Audi, Porsche and Škoda.

Mr Blume said that “Chinese manufacturers are pushing aggressively into Europe” and selling cars at “price points we cannot match”.

He added that he could not see any way Volkswagen’s factories in Emden, Hannover, Zwickau and Neckarsulm could remain profitable into the next decade.

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The carmaker’s chief said Volkswagen’s overheads were “still around 30pc above the level of comparable companies”, adding: “We cannot carry that disadvantage indefinitely and must reduce it.”

Volkswagen made history in December last year by closing its Dresden plant. This was the first time the carmaker had shut one of its German factories in its 88-year history.

Mr Blume said Volkswagen was also exploring “industrial solutions” to keep its factories running, as he suggested that shutting factories would be “the last and most expensive solution”.

He highlighted the potential to convert Volkswagen’s Osnabrück plant into a production facility for Israeli firm Rafael Advanced Defense Systems, with the aim of saving 2,300 jobs.

Volkswagen first announced plans to cut 50,000 jobs in 2024.

However, the restructuring led to a fierce backlash from Germany’s powerful trade unions who have led protests at its factories across the country.

Mr Blume said Volkswagen had already reached agreements with around 37,000 staff to cut jobs, primarily through early retirement deals.

The carmaker warned last year that Donald Trump’s tariffs would inflict a €5bn- (£4.4bn) a-year hit on its business.

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Source: “AOL Money”