Volkswagen CEO Oliver Blume Plans Cost Cuts Amid Labor Resistance

Chief Executive Officer Oliver Blume is scheduled to begin townhall meetings with employees on Tuesday at the company's Wolfsburg headquarters to explain a revised cost-cutting strategy. The move follows significant resistance from the supervisory board regarding previous plans that would have shuttered four German factories and eliminated up to 100,000 jobs.

Blume is now pursuing alternative measures to reach a target operating return on sales of 8% to 10% by 2030. These new initiatives include reducing European annual production capacity by 500,000 units, cutting managerial and administrative roles, and reducing the total number of vehicle models.

Christiane Benner, the deputy chair of the supervisory board and chair of the IG Metall labor union, has dismissed the company's profitability targets as belonging in "cloud-cuckoo-land." Benner questioned the feasibility of achieving a 9% return on sales under current geopolitical conditions and demanded concrete cost-cutting plans before the supervisory board grants approval.