Volkswagen today at a critical meeting with 20,000 employees in its home Wolfsburg plant clearly signaled that a major restructuring is coming – one that likely will cost jobs. Simply put,VW said to the Wolfsburg Works Council that it isn’t making enough money for future investments in products and plants, and worse, its business model is threatened.
In a candid assessment of the VW Group’s now dire financial situation, Karlheinz Blessing, Board Member for Human Resources, said, “Financially strong competitors from the IT and software industry are penetrating the automotive sector.”
Bernd Osterloh, Chairman of the General Works Council at VW said, “We are taking the situation seriously… because we realize this calls for an enormous effort on the part of the company and the workforce… An adequate return is essential for that.”
In Blessing’s view, massive investments in e-mobility and digitization are needed. Blessing added that “Volkswagen bears a heavy financial burden as a result of the diesel issue.”
No kidding you deliberately break the law in multiple regions or countries and consequences – social, ethical, legal, sales and marketing – inevitably follow.
AutoInformed notes the irony in Blessing’s name.
VW appears cursed – and certainly not blessed – as a result of its senior executive approved deliberate cheating on emissions standards. There is also what auto industry observers would call German arrogance that dictates products to consumers – not what they are buying – with manipulation of some, but perhaps not all legal regulators. Exemplum Gratia: a friends VW wouldn’t start so I looked at the owner’s manual to troubleshoot the problem. The first item in the manual listed “Driver Error.” It wasn’t.
Worse, the refreshing of its product line in the U.S. – the world’s second largest auto market after China – is sadly lagging in SUVs and crossovers – increasingly the heart of the business. Instead, VW is in a desultory way concentrating on cars as its major competitors are working full speed to shift to crossovers and trucks.
Bank of America Merrill Lynch said at a recent Automotive Press Association meeting at the Detroit Athletic Club in Detroit: “It should be noted that VW is slightly better positioned with a replacement rate of 20% (2017 to 2020), but with its an extreme over-indexing of cars, it appears at the risk of market share.
Market share equals jobs.
