Porsche/VW CEO under pressure to step down from dual role
Volkswagen investors are putting pressure on CEO Oliver Blume to give up his dual role as CEO of Volkswagen and Porsche as the company faces a crisis.
In August Volkswagen (VW) announced that it was considering closing two plants – the first time in the company’s 87-year history that it will have closed factories in Germany.
This news comes as the German economy edges towards recession. Business activity has fallen for the fifth month in a row, according to the Munich-based Ifo Institute for Economic Research.
Closing two plants would cut tens of thousands of jobs, which has alarmed unions and the German government, especially after Volkswagen tore up agreements guaranteeing jobs at six German plants until 2029.
Since Blume became CEO of VW Group in 2022, investors and analysts have questioned how he can run two listed companies successfully.
Ingo Speich, head of corporate governance at Deka Investment, one of VW’s largest shareholders, asked: “How can he do both jobs in the right way when the automotive industry is in a structural crisis?”
"Costs at Volkswagen are too high compared to international competition," Blume told RTL/ntv, adding that the labour costs in Germany are twice the European level.
He said the group would be assessing all levers in the coming weeks in terms of development cuts, materials, fixed, manufacturing and retail costs.
He argues that cuts are vital if Volkswagen Group is to survive Europe’s shrinking car market and the declining market for German brands among Chinese consumers.
VW managers and workers’ representatives will begin crisis talks about the plant closures and new wage deals in Hanover today.
The head of VW’s works council, Daniela Cavallo, promised “bitter resistance” to the closure plans.
Philippe Houchois, an analyst with Jefferies, told the Financial Times: “If the management cannot get the plant closures, whether Blume can stay or not will definitely become an issue. In the same way for the unions, their head has basically said there would be no plant closure so, if there is one, it puts her in a very difficult position as well.”
Previous CEO Herbert Diess reportedly stepped down following conflicts with Cavallo after his successor suggested VW employed too many people, according to the Financial Times.
Carsten Brzeski, head of macroeconomics at ING, said: “The recent negative news from the German automotive industry is to some extent just another illustration of the ongoing structural and cyclical problems but are unfortunately probably also further fuelling negative sentiment; a perfect vicious cycle.”
Brzeski said that the German economy “is back where it was a year ago: the growth laggard of the eurozone with few signs of an imminent improvement”.
German economic output has been affected by a rise in energy prices and a lower demand for its exports in large economies.
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