Volkswagen brand CEO Thomas Schäfer is known for talking candidly both on- and off-record, and in a recent meeting with managers he sounded the alarm about rising costs at the firm.
According to sources who spoke to Wards Auto, Schäfer addressed a meeting of around 2000 senior managers and informed them, “The roof is on fire”.
Stating that “costs run too high in many areas”, he said the board was discussing a series of “performance programs” that will save €10 billion ($16.5 billion) in spending over the next three years.
He warned managers the coming weeks and months would be “very tough” for Volkswagen, and urged the managers to make “small wins”.
In addition to this, Schäfer said, “Our structures and processes are still too complex, slow and inflexible”. As the company tries to make itself more agile, he told management the firm needed “team spirit more than ever”.
Schäfer isn’t the only senior executive to sound the alarm over Volkswagen’s current state, with chief financial officer Patrik Andreas Mayer saying “our vehicle business is unwell”, and describing Schäfer’s warning as a “last call”.
Since the Dieselgate emissions cheating scandal broke in 2018, Volkswagen has pivoted to developing a parallel line of electric vehicles.
Unlike some legacy brands, Volkswagen isn’t able to abandon vehicles with internal combustion engines as the marque serves many markets, such as those in Latin America, where EV uptake is on a more gentle trajectory.
Coupled with this, the brand has suffered a downturn in demand in China, its largest market. There Volkswagen has been forced to discount in order to stay competitive.
In Europe, demand for some ID EV models has tapered off, with the company slowing production at one of its plants in Germany.
Thomas Schäfer has been CEO of the Volkswagen brand since July 2022. He joined the Volkswagen Group in 2012, and has held down various roles, including head of Volkswagen in sub-Saharan Africa, and CEO of Skoda.
The rest of Schäfer’s working career has been spent at rival Daimler, where he headed up production facilities in South Africa and Malaysia, before taking senior roles overseeing manufacturing and support.