Volkswagen CEO tells managers “the roof is on fire”
Fiery address reveals tough times are ahead for the German car maker as unprecedented investments in the transition to electric vehicles and continued internal combustion engine model development weigh heavily on its operations.
Volkswagen CEO Thomas Schaefer has warned of tough times facing the German car-maker, suggesting “all is at stake” in a fiery address made during a management meeting this week.
In the hour-long meeting – details of which have been leaked to Drive – Mr Schaefer laid out the breadth and severity of problems facing Volkswagen as it seeks to become a leading manufacturer of electric vehicles while continuing to serve global markets with traditional petrol and diesel models, telling over 2000 senior managers, “the roof is on fire”.
In an energetic call to action, the 53-year-old German proposed an immediate freeze in spending: “We are letting the costs run too high in many areas,” he said.
Mr Schaefer indicated the next weeks and months at Volkswagen will be “very tough”. He also appealed to managers to make “small wins”, according to sources with information on the minutes of the meeting, which was held by digital means.
In a bid to streamline operations, the Volkswagen CEO said he would introduce a new series of “performance programs” with the aim of saving the company up to 10 billion Euros in operating costs over the next three years.
The so-called “performance programs” have already been discussed at board member level, Mr Schaefer indicated.
MORE: Volkswagen Australia streamlines line-up, six models axed
The call for fiscal belt tightening at the Volkswagen brand comes as it invests heavily in electric-vehicle technology and production infrastructure, while continuing development of petrol and diesel vehicles to meet increasingly stringent emission and safety regulations in global markets.
It also comes off the back of a downturn in sales in its largest market, China, where Volkswagen has been forced to discount many of its most profitable models to remain competitive against increasing Chinese competition, both in electric and internal combustion engine vehicle fields.
In a streamlining of its Australian operations announced this week, Volkswagen confirmed it would discontinue sales of the Passat and Arteon as well as specific Golf Wagon, Polo and Tiguan models for the Australian market in preparation for the arrival of the new electric-powered ID.4 and ID.5 SUVs in both standard and performance orientated GTX guises.
In the coming months, Volkswagen will begin sales of the electric-powered ID.7 sedan in Europe. It also plans to unveil new-generation internal-combustion engine Tiguan and Passat models, as well as the ID.7 wagon.
Mr Schaefer, a former COO at Volkswagen prior to his promotion to the CEO position in July 2022, appealed to its managers to instigate changes aimed at making the company leaner and more agile.
“Our structures and processes are still too complex, slow and inflexible,” he said.
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In a rally to Volkswagen’s management team, Mr Schaefer said the company needed “Volkswagen team spirit more than ever”.
Mr Schaefer wasn’t the only Volkswagen brand board member to ring the alarm bell.
In a follow-up address during the internal meeting, known to insiders as the Management Meeting Information (MMI), the German car maker’s CFO, Patrik Andreas Mayer, told senior Volkswagen managers “Our vehicle business is unwell” before describing Schaefer’s address as a “last call”.
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