Volkswagen's major shareholder urged swift action to improve competitiveness at the German automaker as it booked billions of euros of impairments on its investment.
Porsche Automobil Holding SE, which holds over 53% of ordinary shares in Volkswagen, said it recognized 3 billion euros ($3.46 billion) of impairments in the first half of the year related to its investment, and another 200 million euros on its Porsche holding.
Volkswagen recently cut sales guidance for the year and has pledged to deepen cost-saving measures as it grapples with a deteriorating Chinese market that has seen a surge in car launches from domestic brands this year and a prolonged price war.
After working on a broad cost-cutting plan throughout 2025 and 2026 that includes an agreement to cut 50,000 jobs across the group in Germany by 2030 and slash billions of euros a year in costs, Volkswagen executives have warned that the measures won't be enough. It aims to cut its model lineup by as much as half and will continue to reduce manufacturing capacity.
Volkswagen Chief Executive Oliver Blume said in a recent memo that the automaker has a 20% cost disadvantage to its peers in administration, infrastructure and other functions that support its core operations and that closing the gap would theoretically reduce staffing by a further 50,000 jobs. Blume also said that he couldn't guarantee the future of four German factories.
Volkswagen executives will meet with labor leaders and staff in a series of sessions to discuss the situation in a few weeks. Union members and employee representatives last month held a series of protests against potential plant closures and job cuts, vowing to fight the overhaul plans.
In a statement Friday, Porsche SE Chairman Hans Dieter Potsch said that with Volkswagen at a crossroads, it is crucial that wide-ranging measures such as cutting capacity and slashing costs are implemented to boost competitiveness, or risk permanently falling behind rivals.
"Every option must be considered," he said.
"The longer decisions are delayed, the bigger the problems will become. The focus must now be solely on what is necessary from a business and economic perspective. All other considerations must be secondary," he added.
Porsche SE said that due to the non-cash impairment losses it has recognized on the value of its investments in Volkswagen and Porsche AG, it reported a loss after tax of 2.22 billion euros in the first six months of the year, from a profit of 338 million euros in the year-ago period.
It still expects to report a positive adjusted group result after tax of between 1.5 billion euros and 3.5 billion euros for the fiscal year 2026 and expects net debt to be between 4.7 billion euros and 5.2 billion euros.
Comments