Can Volkswagen pull off its biggest reset?
Volkswagen's supervisory board will meet on July 9 to discuss what could become the carmaker's biggest transformation to date, marking a make-or-break moment for Chief
Volkswagen's supervisory board will meet on July 9 to discuss what could become the carmaker's biggest transformation to date, marking a make-or-break moment for Chief Executive Oliver Blume in tackling an escalating crisis. Below are some of the most pressing questions and answers ahead of the committee's gathering at Volkswagen's Wolfsburg headquarters, which is expected to start at 1230 GMT and will be preceded by labour protests.Also read: Volkswagen cuts are 'wake-up call' for European industry, BYD advisor says WHAT IS GOING TO BE DISCUSSED? Blume has drawn up a radical transformation plan, with the key sticking points being the possible closure of four German plants - Hanover, Emden, Zwickau and Audi's Neckarsulm site - as well as up to 50,000 in additional job cuts tied to it, sources have said.
In addition, the company is reviewing its sprawling structure and may carve out or spin off its core brand division and components technology business in a bid to simplify the car conglomerate's sprawling structure. WHAT COULD BE THE OUTCOME? Management and labour representatives could agree to start working through the proposals in a serious way, which would likely include months of talks with unions and political stakeholders over the future of plants and additional job cuts. Rather than shutting plants outright, Volkswagen could bring production of models dedicated to the Chinese market to domestic sites, for example Zwickau, a scenario Blume has previously tabled. To increase pressure, Volkswagen could also opt to phase out production by the plants by not allocating new models, which would effectively equal closure but only over the medium term.
Defence firms, which are currently seeking to expand production capacity, could be another alternative for underutilised auto factories.Also read: Volkswagen Law: The unique structure behind Europe's biggest carmaker WHAT'S THE POWER STRUCTURE OF THE SUPERVISORY BOARD? Currently, only 19 of the 20 seats are occupied after former Renk CEO Susanne Wiegand stepped down last month, leaving the board's shareholder representatives with one seat less than the labour side, which continues to hold 10 seats. However, closures of plants covered by the so-called Volkswagen law require a two thirds majority, meaning approval for such a move is virtually impossible against union opposition. SO IS IT IMPOSSIBLE FOR VOLKSWAGEN TO SHUT DOWN FACTORIES? No. Two of the plants at risk - Zwickau and Neckarsulm - are not covered by the Volkswagen law, meaning their closure would not require supervisory board approval.
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