Volkswagen must cut costs faster to change, chair says

Volkswagen AG’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 SE said Friday. The holding company controlled by the Porsche-Piëch owner family added that it fully backs the VW management’s proposals, which include cutting tens of thousands of jobs.

Hans Dieter Pötsch. Image: Bloomberg 

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Volkswagen “is at a historic crossroads,” Porsche SE chair Hans Dieter Pötsch, who also heads VW’s supervisory board, said in a statement. “The longer decisions are delayed, the bigger the problems will become.”

Volkswagen Chief Executive Officer 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 manoeuvrer 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.

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

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

With shareholder payouts declining, the holding company has been trying to diversify away from automaking. It’s 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.

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