Oliver Blume is managing a retreat, not a revival for Volkswagen
By Klaus Berger · Reporting from Frankfurt ·
Oliver Blume has finally stopped pretending.
Arithmetic Cannot Mask a Structural Rot
Oliver Blume has finally stopped pretending. By declaring Volkswagen to be in a "more than critical state," the CEO is admitting what any strategist with a calculator already knew: the company is a bloated relic of a previous industrial epoch. As reported by DW and the Daily Maverick, the board has approved a transformation plan that flags an additional 50,000 job cuts—bringing the total to 100,000—and the staggered phase-out of four German plants, including Emden and Hannover, starting in 2031.
The numbers are stark. Production targets have been slashed to 9 million vehicles per year, down from a pre-pandemic target of 12 million. Blume admits costs are 30% higher than those of rivals. This is not a strategic pivot; it is a desperate attempt to stop the bleeding. We saw this same pattern of delayed urgency during the 2021 Tesla Model 3 ramp-up, where legacy giants mistook a niche trend for a temporary fad. Now, with Chinese rivals poised to potentially triple their European market share to 30% by 2035, as noted by the Oman Observer, VW is discovering that the market does not reward late arrivals.
The Myth of the Consensus Win
The market reacted with a reflexive jump in share price, and Deutsche Bank analysts suggest this agreement proves VW’s "complex governance structure" can actually function. This is the strongest argument for the plan: that the state of Lower Saxony, with its 20% voting stake, and the powerful works council have finally accepted the necessity of pain. To the optimist, this consensus is a breakthrough.
To the ordoliberal, it is a red flag. When the state and the unions are the ones deciding the pace of the "transformation," the result is always a compromise that preserves the status quo at the expense of viability. This is the same moral hazard that plagued the Great Recession automotive crisis, where state intervention often prioritized political stability over industrial efficiency. By negotiating a "ceasefire" rather than a surrender to market realities, VW is merely pricing in a slower death. The 3.8% operating margin is not a foundation; it is a precarious ledge.
A Controlled Descent Toward the GM Model
We must stop treating Volkswagen as a special case of German engineering and start treating it as a balance sheet problem. The historical record is clear: when an industrial giant becomes too oversized and too slow to adapt, incremental trimming fails. The only successful precedent for this level of dysfunction is the General Motors bankruptcy. In 2009, GM did not survive by "exploring alternatives" for plants; it survived through a state-backed structural wipeout that shed legacy liabilities and reorganized assets from the ground up.
VW is attempting a "General Motors bankruptcy" without the bankruptcy. They want the efficiency of a lean operator while maintaining the social contract of a state-owned utility. This is magical thinking. Just as the Volkswagen emissions scandal forced a superficial strategic shift in 2015, this plan offers a cosmetic reduction in model lineups to hide a fundamental lack of competitiveness.
The current plan is not a revival; it is a managed retreat. By delaying the inevitable closures and clinging to a governance model that prioritizes Lower Saxony's employment figures over global competitiveness, Blume is not saving the company. He is merely ensuring that when the collapse finally arrives, it will be more expensive and more chaotic than a clean break would have been.