Volkswagen’s (VW) supervisory board has voted against a restructuring proposal put forward by management underlining the scale of the challenge facing CEO Oliver Blume, Reuters reported, citing unnamed sources.
According to the report, the board rejected the plan by twelve votes to seven.
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Blume is seeking to streamline the group as it contends with growing competition from Chinese manufacturers, substantial tariff costs in the US market, and questions over the competitiveness of its factories in Germany.
VW’s governance framework grants union representatives and the state of Lower Saxony a combined majority on the supervisory board, a structure that has complicated the decision-making process.
Multiple media outlets have reported that Blume’s proposal envisaged cutting as many as 100,000 jobs across the group and potentially shutting four factories in Germany.
However, a statement issued by VW after the board meeting made no reference to job losses or site closures.
Instead, it set out a “future plan” reiterating existing, previously disclosed goals to simplify operations – targets that did not require the supervisory board’s sign-off.
The restructuring, as proposed, would gradually alter a product range that covers mass-market marques VW and Skoda, sports car manufacturer Porsche and luxury brand Lamborghini.
IG Metall, Germany’s biggest industrial union, organised demonstrations by workers at VW Group sites across the country, calling on management to put forward a strategy that protects production.
The company’s existing labour agreement contains a truce on strike action, but unions have warned they could intensify industrial action should management attempt to revisit job-security commitments.
According to sources familiar with the discussions, the state of Lower Saxony, where VW’s Wolfsburg headquarters is located, sought to negotiate a compromise during the supervisory board’s talks.
One source said the state had considered submitting its own proposal but ultimately abandoned the plan, without giving further detail.
VW’s profit margins have fallen by half over the past five years, driven by weaker performance in China, electrification costs and tariffs.
Second-quarter vehicle deliveries dropped 8.6% to 2.07 million, the sharpest quarterly decline in four years, bringing first-half global deliveries to 4.12 million – down 6.3% on the same period last year.
Gains in South America, Western Europe and Central and Eastern Europe only partly offset a 25.9% fall in China, while North America recorded a 3.1% decline over the half despite second-quarter growth of 7.7%.
