Volkswagen must cut costs faster to change, chairman says

VOLKSWAGEN’S majority owner urged Europe’s biggest carmaker to move quickly on cutting costs and excess capacity to return to competitiveness.

Volkswagen should consider “every option” to usher in a turnaround, Porsche Automobil Holding said Friday. The holding company controlled by the Porsche-Piech owner family added that it fully backs the Volkswagen management’s proposals, which include cutting tens of thousands of jobs.

Volkswagen “is at a historic crossroads”, Porsche chairman Hans Dieter Potsch, who also heads the group’s supervisory board, said. “The longer decisions are delayed, the bigger the problems will become.”

Volkswagen CEO Oliver Blume is trying to make the automaker faster and leaner after years of software delays, bloated costs and declining profitability. But his room to manoeuvre has narrowed after the supervisory board, where unions have powerful sway, last month pushed back against plans to shutter four German factories and axe as many as 100,000 jobs.

Blume is instead planning to slash annual production capacity in Europe by another 500,000 units, reduce managerial and administrative positions, and make sweeping cuts to model and equipment variants. Negotiations on the exact nature of the measures are still ongoing.

Porsche, the listed entity that controls the major assets of the Porsche-Piech clan, on Friday (Aug 7) reported a first-half loss after tax of 2.22 billion euros (US$2.6 billion). The billionaire family relies on steady dividend payments, which have come under pressure amid declining profit at Volkswagen and sports-car maker Porsche. 

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With shareholder payouts declining, the holding company has been trying to diversify away from automaking. It has set up a fund to make defence-industry investments and bought stakes in companies including German rocket startup Isar Aerospace and drone maker Quantum Systems. BLOOMBERG