Volkswagen CEO Oliver Blume has taken a step that until recently was unthinkable: he has openly floated the possibility of closing German plants and breaking long-standing job guarantees. The move signals the depth of the crisis at Europe's largest carmaker, which is struggling with high production costs, weak electric vehicle demand, and mounting competition from Chinese rivals. Blume's remarks, reported by several German media outlets, effectively end an era of labour peace that has defined VW for decades.
The taboos being broken are significant. Volkswagen's works council and the IG Metall union have historically enjoyed extraordinary influence, with agreements guaranteeing job security until 2029 and barring plant closures in Germany. By questioning these commitments, Blume is taking a calculated risk: he needs to cut costs drastically to fund the transition to electric vehicles and keep the company competitive. But he also risks triggering a confrontation with workers that could disrupt production and damage morale.
The crisis has been building for some time. VW's profits have fallen sharply, and its flagship ID series of electric cars has failed to gain traction in key markets like China. At the same time, the company faces billions in investments needed for new battery plants and software development. Blume, who took over in 2022, has been under pressure to act decisively. In internal meetings, he has described the situation as 'extremely serious' and warned that without bold measures, VW could fall behind.
For workers, the threat of closures or layoffs is alarming. VW employs about 300,000 people in Germany alone, and many regions depend on its factories. The works council has vowed to fight any breach of existing contracts. Union leaders have accused Blume of breaking trust and warned of 'resistance that will shake the company.' The government in Berlin is watching closely, as any major job losses would be politically sensitive.
The immediate consequences are uncertain. If Blume pushes ahead, he may face strikes and a prolonged conflict that could hurt VW's reputation as a stable employer. But if he backs down, the cost problem remains. Analysts say VW needs to reduce its capacity by at least 10% in Germany to become profitable again. The next few weeks will show whether the CEO can navigate this tightrope or whether the taboo-breaking opens a new crisis of its own.