Volkswagen Declares Automotive "Mega-Crisis": Group Prepares Biggest Restructuring in Its History

Volkswagen CEO Oliver Blume has said the global automotive industry is going through a "mega-crisis," with the group itself standing at its very epicentre. In the coming days he plans to discuss sweeping changes at the company with staff at the Wolfsburg headquarters plant and other German facilities.

"The coming weeks will be decisive. Everyone needs to pull together. We have drawn up the biggest transformation plan in Volkswagen's history," Blume told the German newspaper Bild. According to him, geopolitics, trade barriers, regulatory demands, weak markets and fierce competition are putting pressure on the entire industry.

Anxiety among staff

The planned restructuring has already stirred serious concern among the group's employees. At Saturday's celebration of the 70th anniversary of the commercial vehicles division's main plant in Hanover, one worker admitted that morale in the team was "below freezing point." Another employee refused to discuss the current situation at all, while a third said: "I can't imagine the plant could shut down for good."

Already on Friday, in an internal interview for staff, Blume warned that the situation was "more than critical." He said Volkswagen's overhead costs remain more than 30% higher than those of comparable companies, and that this problem must be solved to keep the business competitive.

What the restructuring means for Škoda Auto

The upcoming Volkswagen restructuring involves substantial cuts to production and jobs. However, Škoda Auto said back in July that the group's reform plan would not directly affect its own operations.

Škoda Auto is one of the largest employers in Czechia: the company runs three production plants in the country and, according to its own figures, employs around 36,500 people, including agency staff. The entire Volkswagen Group had roughly 663,000 employees worldwide at the end of last year.

In July, Volkswagen reported that its net profit for the first half of the year had plunged by 30.7% to €3.1 billion (about 75 billion crowns). The group's operating profit fell by nearly 12% to €5.9 billion, while Škoda Auto's own operating profit rose by around 6% to almost €1.4 billion.

Source: novinky.cz