Volkswagen Group’s Post

This Reuters article is a very good summary of what is going now at Volkswagen Group. The VW model, and more generally, the German economic model, was nothing short of a miracle for many years. It worked wonders under certain political, economical and social conditions. Political stability and peaceful geopolitical neighborhood under the US/NATO umbrella. Cheap energy from Russia. The biggest issue now is that the conditions have radically changed. Under these conditions, the traditional slow, consensual and incremental approach does not work anymore. In a world in which DeepSeek AI essentially emerges out of the blue and disrupts the entire global tech ecosystem, the slow approach of VW, with planned phase outs through 2030 is bound to fail. In many ways, the challenges facing VW are symptomatic for other German companies and for the wider economy. Incremental does not work anymore. Radical change, speed and agility need to be the name of the game. Transformation and survival or slow decline are the choices.

Germany can not wait for another failed Volkswagen AG transformation. The social and commercial consequences of a declining automotive leader are catastrophic. After recent Mechatronics, Battery, Mobility and Investment Failures Volkswagen requires a complete restructuring and breakup. With a heavy heart and a true appreciation for the potential of a thriving Volkswagen Group and "New Auto" strategy we now have to say "enough is enough". Volkswagen share price has fallen from over Euro 240 in 2015 to under 90 in 2025. Despite early electric and hybrid vechicle launches, Volkswagen is now a market laggard behind BYD, Tesla, BMW and Geely-Volvo. Mobility aspirations and transformation into a software-oriented company led to the CARIAD disaster that discqualified VW from the autonomous vehicle race and caused vehicle launch delays across brands. Numerous failed investments like battery startup Northvolt, XPeng and Rivian reflect poor corporate development. Compromised regional management in the Chinese, US and Brazilain markets leading to corruption scandals and falling marketshares and mediocre talent especially current Volkswagen board members for China, IT and Technology and the new leadership team at Cariad have doomed Volkswagen AG. Superior supply chains, purchasing power, talent acquisition, financing and software development capabilities should have been achieved by Volkswagen but despite their "biggest" status have not materialized. Growing revenues and unit sales have become a conviennant distraction for management as operating margins fell to 5% as VW continues to suffer from quality failures and rising costs. Siemens is an inspiring example of how a restructred German industrial powerhouse could return to value generation and perfromance excellence. Siemens shares went from under Euro 90 in 2015 to over Euro 200 in 2025. The Porsche IPO was a successfull step but Volkswagen really needs to enable true brand independence. Cooperations between the brands which is common across the automotive industry will continue but the Volkswagen AG Board and current holding and shareholder structures needs to be dismantled as quickly and as cleanly as possible. I am sure the German Government could find good uses for the resuting financial windfall as well as current shareholders. If not we will be heading back to the 1970s when foreign financial investors bailed out German automanufacturers and even current superstar Porsche needed help. VW "business as usual" and self serving governance practices will continue to destroy value as they have over the past 10 years unless shareholders and relavant government bodies stop the madness. Volkswagen Group Goldman Sachs Morgan Stanley Critical Thinking

🚘 Volkswagen: A German Icon in Crisis In October 2024, Volkswagen announced plans to potentially close three factories in Germany, risking tens of thousands of jobs. This comes as profits fall sharply and debt levels reach record highs, making it the world’s most indebted public company. What led to this situation? Here’s a breakdown: 🔹 Legacy of Growth and Scandal Founded in 1937, Volkswagen rose to global prominence with iconic models like the Beetle and the Golf, then acquired brands like SEAT, Škoda, and Bentley. However, the 2015 “dieselgate” scandal—where Volkswagen was caught cheating emissions tests—cost the company over €32 billion and damaged its reputation. 🔹 Challenges with Electric Vehicles (EVs) Volkswagen invested €122 billion in EVs to redeem itself post-dieselgate. But its EVs are struggling to compete with Tesla and Chinese brands, compounded by a pandemic-weakened market. 🔹 Decline of a Key Business Model Volkswagen’s recent strategy relied on affordable Russian energy to manufacture German-quality vehicles for the Chinese market. But rising energy costs and China’s push for domestic brands are eroding this model. 🔹 Key Takeaway Volkswagen faces steep challenges, including debt, weak EV sales, and geopolitical risks. Yet, as a German industrial icon, its path forward is vital for Germany’s economy and reputation.

𝐒𝐮𝐦𝐦𝐚𝐫𝐲 𝐨𝐟 𝐭𝐡𝐞 𝐦𝐨𝐬𝐭 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭𝐢𝐧𝐠 𝐧𝐞𝐰𝐬 𝐟𝐫𝐨𝐦 𝐫𝐞𝐜𝐞𝐧𝐭 𝐝𝐚𝐲𝐬 ✅𝐑𝐞𝐮𝐭𝐞𝐫𝐬 Honda and Nissan Motor Corporation, potentially with Mitsubishi Corporation, are exploring a merger to counter Chinese and Tesla EV dominance. A March 2024 partnership memorandum highlights shared development of EV components and AI platforms. The merger, creating a $52 billion entity producing 7.4 million vehicles annually, could boost competitiveness but faces challenges, including cultural integration and regulatory hurdles, particularly in the U.S. https://lnkd.in/dk88CkA7 ✅𝐍𝐢𝐤𝐤𝐞𝐢 Foxconn's EV ambitions fuel interest in Nissan amid its financial struggles, offering access to expertise, supply chains, and sales channels. The Taiwanese giant, targeting $30.5 billion EV revenue by 2025, faces setbacks like failed partnerships and geopolitical challenges in #Japan. Despite obstacles, Foxconn's diversification strategy, including AI servers and EV localization, ensures growth, positioning it as a key player in the evolving automotive supply chain even if a Nissan deal falters. https://lnkd.in/ddwQugei ✅𝐑𝐞𝐮𝐭𝐞𝐫𝐬 Bosch plans to cut 8,000–10,000 jobs in #Germany, citing declining automotive demand and competition from Chinese EV makers. The announcement has caused workplace tensions, with union leader Frank Sell warning of potential strikes by 2025. Bosch argues the cuts are vital for competitiveness, while promising socially responsible measures. This mirrors broader European industry struggles with high costs and slow EV adoption, further straining labor relations. https://lnkd.in/dzi6td-S ✅𝐑𝐞𝐮𝐭𝐞𝐫𝐬 AUDI AG will close its Brussels plant by February 28, citing unsustainable operations despite efforts to find alternatives. The facility, once key to producing e-tron models, struggled amid shifting market dynamics and competitive EV pressures. While addressing financial concerns, the closure raises concerns about displaced workers and Audi's ability to navigate the evolving EV landscape. https://lnkd.in/djKsA6eC ✅𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐓𝐢𝐦𝐞𝐬 The Porsche-Piëch family pushes for Volkswagen Group factory closures in Germany to counter falling European sales, clashing with unions and political leaders. Despite workers' protests and political opposition, the family demands cost-saving measures to protect dividends critical for managing €5.1 billion debt. Tensions escalate as union resistance, political stakes, and financial uncertainties, including a potential €20 billion VW write-down. https://lnkd.in/dC37MADi #automotiveindustry #electricvehicles #batteries #china #europe Tesla BYD MG Motor Europe Ford Motor Company Renault Group PowerCo SEAT S.A. CUPRA Stellantis Mercedes-Benz AG BMW Group Porsche AG

Miao Wei is an #auto industry heavyweight turned policymaker best known as a pragmatic and quick-minded reformer in China’s political sphere.   In a series of past interviews with Caixin, Miao shares his insights into the formulation of industrial policy, the development of the domestic #NEV sector and #intelligentdriving tech, and Chinese automakers’ global expansion efforts. Explore his key insights via the link in the comments.

Volkswagen is going through its deepest crisis in years. So is Germany. And that’s no coincidence. While the carmaker’s travails are exposing missteps, they also show how Germany’s economic model is struggling to keep up with a changing world. Fixing these problems will require changes both for the carmaker and the world’s third-largest economy. “VW’s problems mirror to a degree the problems of the German economy, and the problems of the German economy are reflected in VW,” said Moritz Schularick, president of the Kiel Institute for the World Economy, an independent think tank. “Resistance to change is something that hangs over both.” Tepid sales, mounting foreign competition, and an expensive electric-vehicle strategy that hasn’t wowed buyers have left VW’s stock trading around 14-year lows. On Tuesday, the company canceled a 30-year agreement to avoid compulsory redundancies at the VW brand, setting up a battle with workers as it looks to rightsize its cost base. Meanwhile, Germany’s economy is stagnating. Its GDP, almost flat since 2019, shrunk 0.3% last year, and some economists expect it to contract again this year. VW is Germany’s largest employer and car making is the country’s flagship industry, accounting for 5% of gross domestic product, according to several estimates. “VW is to Germany what Nokia was to Finland or Samsung is to South Korea…There’s a scenario where that sector will shrink significantly and replacing those jobs with equally well-paid jobs will not be easy,” said Dirk Schumacher, Europe economist at Natixis. Germany’s economic malaise and the crisis at VW have joint roots: Heavy reliance on China, high costs and an eroding technological leadership. Manufacturing accounts for a fifth of Germany’s gross domestic product, about twice the U.S. level, with a focus on capital goods and cars. For years, this was a good fit for a globalizing world. German companies built factories in emerging markets, dug Chinese subways and made cars for the new middle classes. And Germany’s industrial base grew. Nowhere was the boom clearer than at VW. A decade ago, the company recorded €5.2 billion, equivalent to around $5.7 billion, of operating profit from its Chinese joint ventures, and that doesn’t include income from brand licensing, parts sales or exports of high-end models from Germany. Covid-19, geopolitics and China’s maturing economy changed that. As tariffs and other trade barriers rose around the world, German exports began falling. China had been Germany’s largest trade partner since 2015, so slowing growth there hit German companies hard, as did the rise of Chinese competitors. “China,” said Schularick, “turned from tailwind to headwind.” EV giant BYD overtook VW last year as China’s bestselling car brand. In 2020, China overtook Germany as the biggest exporter of machinery and equipment. Today it produces more industrial machines than the U.S., Germany and Japan together. 

If the people’s car maker aka Germany’s Volkswagen is planning to shut three plants in Germany and tell employees to accept a 10% pay cut, that’s another clear sign that Germany is facing formidable economic challenges. It boils down to competitiveness, so protectionism of the EU will achieve the opposite. […] Volkswagen's planned cost-cutting programme was unavoidable in order to remedy "decades of structural problems" at the German carmaker, CEO Oliver Blume said in an interview published on Sunday. "The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW," Blume told Sunday paper Bild am Sonntag. […] #volkswagen #germany #costs #competitiveness #china #europeanunion #protectionism #automotive #ev

Volkswagen will invest $2.69 billion to expand production and research in China to support goals that include reducing the time required to bring new technologies to market. The principle is clear - the companies that bring newer tech to the frontline, faster, are the ones that will not only attract newer talent, but also post superior results. At the end of the day, customers wish to see better performance metrics and newer user-freindly features in their vehicles. #industry #manufacturing #automotive

The German Economic Institute (IW) warns —the "golden era" of German #Automotive may be ending, as all golden ages do... Recently, several major German automakers have successively lowered their profit forecasts, and revenue dropped in the first half of 2024. Despite this, the industry still makes up 25.2% of Germany's manufacturing revenue, and 70% of earnings from exports, the highest export share in 15 years. The big question: What's next? - Is this the beginning of the end for legacy automakers? - What new opportunities will emerge from this transformation? - Who will lead the charge into the next era of mobility? The road ahead is uncertain and challenging, but also full of potential—for those bold enough to adapt. End of an era or the dawn of a New Beginning? We will see. #Germany #Innovation #Disruption #Adaptability

China’s emergence as an automotive powerhouse is posing a threat to established firms. The transformation of the Chinese automotive industry began modestly with the production of the first Chinese car, the Dongfeng CA71, in 1958. Initially, the industry was underdeveloped, but post-1949 socialist reforms spurred gradual growth. The 1980s marked a significant turning point with economic reforms and foreign investment, leading to joint ventures and the assembly of cars in China. The 1990s and 2000s saw a surge in foreign investment, technological advancements, and managerial expertise from European brands, propelling China onto the global automotive stage. This period also witnessed the start of private car ownership, significantly boosting industry growth. Government policies and economic growth further reinforced China's emergence as a manufacturing hub, attracting substantial foreign investment from major international corporations and resulting in robust state-owned car manufacturers. In recent years, Chinese automotive brands have experienced exponential growth both domestically and internationally. In 2023, China produced 30.16 million vehicles, securing its position as the world's largest automotive manufacturer, with projections suggesting continued growth to over 31 million vehicles in 2024. Key factors behind this success include competitive pricing, economies of scale, and efficient manufacturing techniques. Chinese cars are significantly more affordable than their American, Japanese, and German counterparts, democratizing car ownership domestically and globally. The industry also saw a substantial increase in new energy vehicles (NEVs), with a 31.8% year-on-year growth in early 2024. Leading companies like BYD, SAIC, and Geely are aggressively expanding their NEV production and global presence, while major foreign automakers are enhancing their R&D and local manufacturing capabilities in China. This dynamic growth trajectory positions China as a formidable player in the global automotive market.