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Volkswagen’s historic restructuring is not enough, the company’s chief financial officer has warned, citing a “huge risk [that] complacency kicks in again” before Europe’s largest carmaker can transform itself.
“We are not done yet. The real proof that we can perform the programme and implement it 100 per cent still hasn’t come,” chief financial officer Arno Antlitz told the FT’s Future of the Car summit on Tuesday.
“There is a huge risk that once a programme like this delivers the first results, then complacency kicks in again.”
In December, Volkswagen backtracked on plans to close several German plants following fierce worker resistance, reaching an unprecedented deal to halve its production capacity in the country and cut its workforce by 35,000 by 2030. Earlier this month, the company said it had already shrunk its workforce by 7,000.
At the summit, Thomas Schäfer, chief executive of the company’s flagship VW brand, echoed the warning, saying that the car company was not where it wanted to be yet. “There is a lot of work to be done,” he said.
Volkswagen announced the restructuring programme in the face of a costly transition to electric vehicles, structurally lower sales in Europe and falling market share in China.
The company’s woes have sparked alarm in Germany and more broadly across Europe, as they highlight the challenges the continent faces with productivity and energy and labour costs compared with Chinese carmakers, which are pushing to expand in the region.
Antlitz also called on politicians in Brussels and Berlin to implement structural reforms to boost productivity and flexibility in the labour market, saying a failure to act now would jeopardise the success of Germany’s recent investments in defence and infrastructure.
“We need to tackle not only structural reforms, but also flexibility of labour market,” Antlitz said. “If we don’t do that, we risk these investments we need to do, for example in Germany, in defence and in infrastructure.”
The group’s quarterly sales of EVs in Europe have more than doubled during the first quarter, with every one in five cars sold in western Europe now fully electric. However, rising battery-run car sales also squeezed its operating margins, which fell to 3.7 per cent from 6 per cent in the same period last year.
Schäfer said the VW brand was aiming to reach cost parity between electric cars and petrol vehicles by 2030. “We are not fast enough,” he said.
Profits have also come under pressure from US President Donald Trump’s higher tariffs on imports of foreign-made cars. The group’s operating margin is projected to fall to the lower end of its range at 5.5 per cent due to increasing trade restrictions.
