Time’s Running Out for Volkswagen and its CEO

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The world’s second-largest automaker could get a little bit smaller – at least if CEO Oliver Blume has his way. He’s hoping to convince the Volkswagen supervisory board to approve a downsizing plan it rejected two months ago. But what happens if they say “No”?

For the better part of the last eight decades, German automakers had a simple rule: if production cuts were to be made, they’d come outside the country. But reality has finally hit home. Last December, Volkswagen CEO Oliver Blume won a hard-fought battle to shutter its “Transparent Factory” in Dresden. But with sales, revenues and earnings continuing to slide, Blume wants take things further, proposing to add three more German plants to the list.

Potentially impacting anywhere from 50,000 to as many as 100,000 workers, the proposal drew fiery opposition – and “No” votes from 12 of the 19 members of the VW supervisory board. Several competing plans have since been offered up but Blume and his team insist none of them will fully dig Volkswagen out of the deep hole it finds itself in as sales, revenues and earnings – especially in China – continue to tumble.

The board is expected to take another swipe at Blume’s proposal later this week but it’s anyone’s guess what might happen – more specifically, what might happen if they again reject his proposal. If so, there is one “nuclear option,” as Reuters calls it, remaining for Blume. He could call an emergency shareholders meeting and put the plan to a vote there. One way or the other, we can expect to see a smaller Volkswagen going forward. The real question is just how much smaller? The conflict comes at a time when Korean carmaker Hyundai has announced a major expansion plan that could put it in position to overtake its German rival as the world’s second -largest automotive manufacturer.

A Harsh Rejection

As I reported back in July, Blume’s proposal would have become the largest restructuring plan in automotive history, impacting as many as 100,000 workers and shuttering four plants – three new ones on top of Dresden. There was even the possibility, some sources claimed, that the Group would spin off the very brand at the core of the enterprise, Volkswagen itself.

At the heart of the problem facing the company wasn’t a question of sales numbers. The Volkswagen Group sold just short of 9 million vehicles worldwide last year, a modest 0.5% decline from 2024 – and still enough to position it as number two among all automakers. “Our products are highly popular, we just aren’t making enough money from them,” Blume said in an interview with German newspaper Bild back in July. “That is why we must continue to cut costs — in every area.”

Overall sales might have seemed reasonably solid last year, Blume has clearly seen a future that worries him.

A Train Wreck in China

At the heart of that is China, a market that the Volkswagen Group, including brands as diverse as VW, Audi and Bentley, dominated for the first two decades of the new millennium. From the time it launched operations there until 2022, the People’s Republic was the group’s single largest market, frequently accounting for as much as a third of total global sales.

Coming out of the COVID pandemic, however, things began to change rapidly. It’s not just that the Chinese car market has hit the brakes but the fact that buyers there have been migrating en masse to the country’s increasingly powerful domestic brands, including BYD, Geely, Chery and SAIC. The Group’s year-over-year deliveries in China fell 26% for the first half of 2026, the pace accelerating to 36.6% for the second quarter. That dragged overall worldwide deliveries down by 8.6%, its steepest decline in four years, Reuters noted.

“Lacking Clarity”

Today marks the fourth anniversary for Blume in the role of CEO. He’d earned plenty of kudos in his prior role as executive chairman at Porsche, but things quickly soured at the VW Group. He has overseen a 57% downturn in the automaker’s stock, from 180.40 euros on the day he took office, to 77.20 euros as of late on Tuesday, September 1, 2026.

While there seems broad agreement that something needs to be done, including cuts in production and employment, Blume has so far failed to win the necessary support to his side. His proposal has been criticized for providing relatively little clarity. Among other things, VW appears to be studying an approach that could see it cut drop a substantial number of the products it currently sells.

Part of the CEO’s challenge is the complicated structure at Volkswagen. Like other major German companies, it has two boards, one where labor holds half the seats. Even on the supervisory board the 19 members face pressure from both unions and from the State of Lower Saxony. That’s where VW headquarters in Wolfsburg are located and where a sizable number of voters work for the automaker and its suppliers. The influence of the state is more than indirect as it’s VW’s second-largest shareholder – and has an even larger say in company decisions.

Blume Booed

Blume had hoped to make his case directly to union workers last month, meeting with them at a packed hall at the headquarters complex. “Our plan for the future is the largest transformation ​program in our company’s history.” He acknowledged, adding that, “To make this happen, everyone needs to pull together now.” He wound up facing a chorus of boos, according to reports from Germany, as well as banners  including declaring “Our jobs are not your balance sheet adjustments.”

The CEO hasn’t fared much better winning over Lower Saxony officials. It doesn’t help that the current administration faces a potentially solid challenge from the far right Alternative for Germany party.

Yet, both government and union leaders have come to realize the crisis Blume wants to head off is real and, while they may not be ready to roll over, they recognize some cuts will be needed. “Cooperation ⁠is possible,” Thorsten Groeger, the IG Metall union representative said in a statement. For his part, Lower ​Saxony state premier Olaf Lies said, “Everyone involved is fully aware that Volkswagen and the automotive industry as a whole are currently facing a critical situation, with an extremely challenging international competitive ⁠environment.”

We could see some sort of compromise emerge in the coming days, though some say Blume may be forced to travel one of several alternative paths. He could look for solutions reducing the number of plant closures and job losses – at least for now, waiting for further setbacks to force more at a later date. He could trigger the nuclear option with an emergency shareholder meeting. He could even call it quits, tendering his resignation and leaving VW’s fate to the hands of someone else. Should Blume fail to sell a turnaround plan he can support that might be his only real remaining option.