Star Metro - VW chief warns carmaker's situation 'more than critical'

In an interview posted on the company's intranet and sent to AFP, Oliver Blume said Volkswagen and the rest of Germany's car industry are facing "the biggest upheaval in their history" from global headwinds and Chinese competition.

The carmaker is weighing up huge job cuts. In the coming days, Blume will meet with employees at Volkswagen's headquarters in Wolfsburg and sites in Zwickau and Emden to give updates on the company's plans.

In the interview, Blume said that no decision had been taken on plant closures but reiterated the company's position that for plants in "Emden, Hannover, Zwickau and Neckarsulm we cannot currently see any way of them remaining profitable in the 2030s".

He said that the company also had to deal with the over-production of 500,000 vehicles per year in Europe.

Closing factories would always be "the last and most expensive solution", Blume said.

He added that at sites where car production may stop, Volkswagen was exploring other "industrial solutions", pointing to advanced talks with companies from the defence industry over using its factory in Osnabrueck.

Blume described the situation facing the company as "more than critical" and said its current level of profits was not sufficient to "ensure we have the means over the long term for new technologies, new products and our locations".

- US tariffs, Mideast war -

Alongside competition in and from China, Blume named US tariffs, the war in the Middle East and regulatory burdens as key challenges for the company.

Asked whether he expected the situation to improve, Blume said "on the contrary, we have to assume that risks will get worse, worldwide".

In July, Blume presented saving plans to Volkswagen's supervisory board but no decision was taken.

German media reported at the time that the Lower Saxony state government, a major shareholder in the Volkswagen Group which holds 20 percent of the voting rights, refused to sign off on the plans.

The group has already ordered 50,000 job cuts and Blume said that agreements have already been reached with 37,000 employees.

Blume appealed to employees to pull together for the sake of the auto giant.

"We will only be successful if everyone in the company supports this plan," he said.

The head of the IG Metall union on Friday sharply criticised management and promised to resist the factory closures.

Volkswagen's "workers have already to accept hefty and painful cuts and now are getting another slap in the face," Christiane Benner told the Wirtschaftswoche weekly.

S.Morin--SMC