Volkswagen CEO Oliver Blume told employees that the carmaker's position is “more than critical”, AFP reported today. The warning, posted on the auto giant's intranet, came before the executive's meetings with staff where he is set to explain its savings plans.

Blume's statement came in an interview on the company's intranet where he said VW and the car industry in Germany is facing “the biggest upheaval in their history” due to global headwinds and Chinese competition, the report added.

The carmaker is weighing up huge job cuts, the report added. In the coming days, Blume will meet with employees at Volkswagen's headquarters in Wolfsburg and sites in Zwickau and Emden to give updates on the company's plans.

In the interview, Blume said that no decision had been taken on plant closures but reiterated the company's position that for plants in “Emden, Hannover, Zwickau and Neckarsulm we cannot currently see any way of them remaining profitable in the 2030s”.

He said that the company also had to deal with the over-production of 500,000 vehicles per year in Europe. Closing factories would always be “the last and most expensive solution,” Blume added.

He added that at sites where car production may stop, Volkswagen was exploring other “industrial solutions”, pointing to advanced talks with companies from the defence industry over using its factory in Osnabrueck.

Blume described the situation facing the company as “more than critical” and said its current level of profits was not sufficient to “ensure we have the means over the long term for new technologies, new products and our locations”.

Alongside competition in and from China, Blume also said that tariffs imposed by the United States, the war in the Middle East and regulatory burdens are key challenges for the company. When asked whether he expected the situation to improve, Blume said “on the contrary, we have to assume that risks will get worse, worldwide”.

In July, Blume presented saving plans to Volkswagen's supervisory board, but no decision was taken. German media reported at the time that the Lower Saxony state government, a major shareholder in the Volkswagen Group which holds 20% of the voting rights, refused to sign off on the plans.

The group has already ordered 50,000 job cuts and Blume said that agreements have already been reached with 37,000 employees.

Blume appealed to employees to pull together for the sake of the auto giant. “We will only be successful if everyone in the company supports this plan,” he said.

The head of the IG Metall union on Friday (21 August) sharply criticised management and promised to resist the factory closures. Volkswagen's “workers have already to accept hefty and painful cuts and now are getting another slap in the face,” Christiane Benner told the Wirtschaftswoche weekly.

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