Volkswagen is facing fresh pressure from its largest shareholder to accelerate restructuring efforts as the German automotive giant struggles with rising costs, tariff pressures and intensifying competition from Chinese manufacturers.
Porsche SE, the holding company controlled by the Porsche and Piëch families, said Volkswagen must take immediate action to strengthen its long-term competitiveness, warning that delays could leave the automaker increasingly vulnerable to global rivals.
The families jointly control Volkswagen through Porsche SE, which owns about 31.9% of the automaker’s equity.
“The Volkswagen Group is at a historic crossroads. The decisions that Volkswagen makes now will determine its future,” Hans Dieter Pötsch, chairman of the board of management at Porsche SE, said in a statement.
He called for faster decision-making across the group and said business and economic priorities should guide Volkswagen’s next steps.
“The focus must now be solely on what is necessary from a business and economic perspective,” Pötsch said.
Among the measures being pushed by Porsche SE are reductions in excess production capacity, lower operating costs and improvements in the speed and effectiveness of decision-making and execution.
Pressure builds on Volkswagen’s turnaround
Volkswagen has been working on a broad restructuring strategy as profitability comes under pressure across several key markets.
The company has been considering significant workforce reductions as part of efforts to lower costs and improve efficiency. Plans under discussion could affect as many as 100,000 jobs, according to previously reported proposals, potentially making the restructuring one of the most extensive changes in Volkswagen’s history.
The German automaker is also examining ways to improve productivity and increase capacity utilisation across its manufacturing network.
Johannes Lattwein, Porsche SE board member responsible for finance and IT, said Volkswagen must consider all available measures needed to restore its competitive position.
“Competitiveness is the goal. Every option must be considered in pursuing it,” Lattwein said, warning that Volkswagen risks permanently losing ground to international competitors if decisive action is not taken.
Chinese automakers intensify competition
Volkswagen’s challenges have become particularly visible in China, historically one of its most important markets.
Chinese manufacturers including BYD, Geely and SAIC have rapidly expanded their electric vehicle portfolios, offering increasingly competitive technology and pricing while attracting domestic consumers away from established foreign brands.
Volkswagen and other European manufacturers are also facing stronger Chinese competition outside China as lower-priced electric and hybrid vehicles gain traction in Europe and other international markets.
The changing competitive landscape has forced traditional automakers to accelerate development cycles, cut manufacturing costs and invest more heavily in software, battery technology and electric mobility.
Volkswagen has already been expanding its technology strategy in China as it seeks to develop vehicles that can compete more effectively with rapidly evolving domestic brands.
Tariffs add to financial strain
Trade barriers are creating another challenge for the group.
Volkswagen is dealing with tariff-related costs running into billions of euros, adding further pressure at a time when the company is already trying to reduce structural expenses.
The combination of trade costs, weaker profitability and fierce competition has increased pressure on management to deliver results from its restructuring programme.
Volkswagen shares were trading around 0.6% higher on Friday afternoon, although the stock has fallen more than 27% since the beginning of the year, according to figures cited in the original report.
For Porsche SE, the message to Volkswagen management is increasingly clear: restructuring cannot be allowed to drag on.
With global carmakers racing to adapt to the electric vehicle transition and Chinese manufacturers expanding aggressively, Volkswagen’s ability to reduce costs, improve efficiency and make faster strategic decisions could prove central to maintaining its position in the global automotive industry.
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