At the annual general meeting, VW CEO Oliver Blume didn’t shy away from blunt words. Though the group is on track shedding 50,000 workforce, he stated that the “business model is no longer working today.”
Volkswagen is struggling hard with the modern-day reality of car building, to the point that the question no longer is whether costs can be controlled or whether the group has lost its relevance.
‘No longer works today’
For Volkswagen, cutting its way to competitiveness when BYD, Leapmotor, MG, and Geely are eating into its market share in China and Europe is a much bigger task than anyone anticipated.
The biggest problem is that Europe’s largest carmaker is still organized like a company twice its size. Blume is shrinking the footprint, and while his plan is on track, he will shortly present a revised one, because the previous one won’t suffice. Even its own board members now question whether the group will survive.
CEO Oliver Blume did not attempt to soften the message at the annual general meeting. Volkswagen’s business model, he admitted, “was successful for decades” but “no longer works today.” The captain of the world’s second-largest automaker just told shareholders that the old playbook is ready for the shredder.
The new ‘Plan for the Future’ will target a return to 8 to 10 percent on sales by 2030. Blume says he needs that percentage to fund the transformation toward more electrification and autonomous driving while maintaining a dividend. But right now, he cannot even defend the 4% target analysts already call optimistic.
So, 8 to 10 percent is a very ambitious target. Technologically, the cars themselves keep up with the competition, but they don’t generate cash like they used to.
Barely relief
In 2023, the group reported an operating profit of €22.5 billion. Last year, that collapsed to €8.9 billion. Net profit in 2025 fell 44% to €6.9 billion. The first quarter of 2026 barely offered relief, delivering an operating margin of just 3.3%.
And then there’s the geopolitical backlash. Almost every euro saved gets swallowed by new tariffs and trade barriers.
Volkswagen has reaffirmed the plan to cut 50,000 jobs across VW, Audi, Porsche, and software unit Cariad by 2030. Thirty-five thousand of those cuts hit the core VW brand alone.
By the end of 2026, the workforce will already have shrunk by 19,000, while 28,000 voluntary departures are planned. But laying off workers does not make more people buy your cars.
Factory costs at German sites dropped more than 20% in 2025. That looks like success until you match it against the capacity numbers. Blume plans to slash European plant capacity by another 500,000 vehicles by 2030.
That comes on top of the ongoing reduction of one million units by 2028. China will see a matching cut. By decade’s end, global annual capacity drops by roughly one million cars.
Only the independent voice has left
The crisis is rippling through at the highest levels. An internal ‘Belief Audit’ leaked to German media this week revealed how scared the board really is. According to the leak, six out of nine board members believe “the existence of the group is threatened.”
The board seems to struggle in keeping its faith. Susanne Wiegand, the only ‘independent voice’ on the board who chaired the audit committee, has quit. She was less than a year in function.
The Wolfsburg playbook recipe was tried and tested. Develop in Germany, build in Europe, sell to the world, and reap cash in China. That strategy has withered.
The German giant has now joined Stellantis and Renault in lobbying Brussels for ‘Made in Europe’ local-content rules, hoping to protect the continent’s supply chain against cheap foreign components.
So, Blume’s answer is to draft yet another plan. He wants to present it to the board this summer. It may involve closing more plants. But cost control is managed decline. The question is whether Wolfsburg can remain relevant and still know how to build the cars people will actually buy in 2030.
