Key facts
- Volkswagen management is seeking approval for a major turnaround plan involving job cuts and potential factory closures.
- The plan faces opposition from labor representatives and the state of Lower Saxony.
- A supervisory board meeting is scheduled for September 4 to vote on the restructuring proposals.
- Lower Saxony's Premier Olaf Lies urged an agreement before the board meeting.
- Volkswagen's executive committee will meet September 3 to discuss compromises.
Volkswagen's management is preparing to present a major turnaround plan, which includes doubling job cuts to as many as 50,000 and potentially closing factories, to address costly tariffs, falling demand, and mounting competition from China. The strategy has created a rift between management and powerful labor representatives, as well as the state of Lower Saxony, the company's second-largest shareholder. Both labor and Lower Saxony hold a combined majority of 12 seats on the 20-seat supervisory board, meaning they could block the plan, as they did in July.
Lower Saxony state Premier Olaf Lies has urged all parties to use the remaining time before the September 4 supervisory board meeting to find common ground. He emphasized the need for urgent action due to business challenges but also stressed Volkswagen's responsibility to its employees, families, suppliers, and the wider economy. The executive committee, including representatives from VW's works council, Lower Saxony, and the Porsche and Piech families, is set to meet on September 3 to discuss potential compromises, likely focusing on the scale of job cuts and the future of at-risk factories.
Should the supervisory board reject the plan again, management might consider calling an extraordinary shareholder meeting in October to bypass the board's opposition. This move would shift the decision-making power, as workers have no say at shareholder meetings, and Lower Saxony's stake would be outvoted by major shareholders like Porsche SE. However, the "Volkswagen Law" requires over 80% shareholder approval for significant actions like business spin-offs, potentially giving Lower Saxony a blocking minority. Management could also seek separate votes on carving out divisions, which might face higher approval thresholds.