The future of the carmaker: Volkswagen faces a power struggle like no other in the group

Volkswagen faces its most intense power struggle yet as tensions over plant closures and job cuts escalate ahead of an upcoming supervisory board meeting. The conflict has drawn sharp attention from Niedersachsen, Germany’s easternmost state, which holds a 20 percent stake in the company and wields special influence through its own Volkswagen law. Niedersachsen's Minister President, Olaf Lies, has called for urgent talks with all stakeholders to prevent further escalation before the board meets again next week in Wolfsburg. The situation has reached a critical juncture as three separate proposals for cost-cutting measures have been placed before the supervisory board, a highly unusual move given that decisions are typically made by consensus. The board will meet again on Friday, marking the second time in recent months that such discussions are taking place. This signals growing internal divisions within one of Europe’s largest automotive groups. At the heart of the dispute are two influential shareholder families, the Porsches and the Piëchs, who have long advocated for drastic cost reductions. According to insiders, these families see the current deadlock involving Niedersachsen and the works council as an obstacle to their goals. If negotiations fail, they could push for an extraordinary shareholders' meeting, potentially within weeks, to break the impasse. Such a scenario would mark a historic moment for Volkswagen, as no such confrontation has occurred in its history. The proposed cost-cutting plan under consideration by the management could lead to the elimination of more than 100,000 jobs, an increase from the previous round of layoffs that affected around 50,000 workers. Plants in Emden, Hannover, Zwickau, and the Audi factory in Neckarsulm could face the end of automobile production. These potential closures have sparked concern among employees, local governments, and suppliers who rely on Volkswagen’s presence in the region. In response, both the works council and the Niedersachsen government have put forward their own plans aimed at mitigating the impact of job losses. Minister President Lies emphasized that his government, as a major shareholder, had laid the groundwork for compromise. He stressed that Volkswagen must balance financial objectives with social responsibility, particularly considering the thousands of workers and their families employed in the region, along with local suppliers and service providers. Lies acknowledged the need for immediate action to address the company’s challenges but warned against solutions that prioritize profit above all else. “For me as minister president, one thing is clear: Volkswagen is much more than just the sum of business metrics,” he stated. “Everyone understands that things must be addressed under pressure.” However, he argued that the transformation of Volkswagen should reflect its historical strength, combining economic sense with social responsibility. The debate extends beyond job cuts to broader structural changes within the corporation. Discussions include restructuring the group to reduce political influence, especially over the core brand, Volkswagen. Currently, the Volkswagen AG oversees the entire group, including the main brand. Proposals suggest separating the Volkswagen brand into an independent subsidiary, similar to how Audi and Škoda operate under the Wolfsburg holding. The same approach is being considered for the component division. Niedersachsen opposes this shift, arguing that it could diminish the role of politics in shaping the company’s future. The state’s involvement is rooted in its ownership stake and legal framework, which grants it unique input. As the conflict intensifies, the outcome of the supervisory board meeting will determine whether Volkswagen can navigate this crisis without fracturing further. The stakes are high, with the potential for a decision that could redefine the company’s structure and direction.