Volkswagen’s factory crisis is getting close to a boardroom brawl. Management reportedly faces a crucial vote on September 4 over its restructuring plans and could take the fight directly to shareholders if it loses. Meanwhile, VW has suffered another indignity, losing its place in Europe’s most important stock market index to Nokia.
We’ve already reported that VW Group management is looking at potentially closing four German factories in the next decade. Emden and Zwickau could reportedly go in 2031, Hanover in 2032, followed by Audi’s Neckarsulm facility in 2034.
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Together, those plants currently employ tens of thousands of people. But wanting to close production sites and actually getting permission to do it are two very different things. Management’s restructuring proposal failed at VW’s supervisory board in July after opposition from its 10 employee representatives and the state of Lower Saxony, which controls 20 percent of VW’s voting rights. Management will essentially try again on September 4, according to Automobilwoche.
If it loses again, things could get considerably messier. Automobilwoche reports that VW’s leadership could call an extraordinary general meeting and put its plans before shareholders. “Then things will really come to a head,” one employee representative told the publication,
There’s plenty at stake beyond those four factories. VW had already agreed to eliminate 50,000 jobs across Volkswagen, Audi and Porsche, but CEO Oliver Blume (below) reportedly told employees in August that another 25,000 positions must disappear in Germany. Another 25,000 could go overseas, potentially taking the total to 100,000.
Cutting Capacity By 3 Million
Management also reportedly wants to reduce annual production capacity from 12 million vehicles to match the 9 million it actually makes, and trim the number of model variants. Weakness in China, tougher Chinese competition in Europe and US tariffs are all piling on the pressure.
And while Volkswagen argues internally about how much smaller it needs to become, Europe’s stock market has already done a little downsizing of its own. VW is being dropped from the Euro Stoxx 50, the euro area’s benchmark index, later this month, with Nokia taking the vacated seat, Bloomberg reports. The swap takes effect September 21 and leaves BMW, Mercedes-Benz, and Ferrari as the only carmakers in the index.
The German automaker’s shares have struggled amid its restructuring headaches, EV transition and increasingly brutal competition from China. Getting dumped from an index is hardly VW’s biggest problem (Stellantis suffered the same fate last year). But as symbolic kicks in the teeth go, it’s got to hurt.