Volkswagen’s majority stakeholder, the Porsche-Piëch family, has expressed strong support for reducing the number of German plants as part of a cost-cutting strategy, according to Financial Times. The Porsche-Piëch family controls Porsche SE, which holds a significant stake in Volkswagen Group.
This support comes after German unions proposed cutting dividends instead of shutting down factories, but the Porsche-Piëch family remains concerned about the company’s long-term global competitiveness. They argue that downsizing is essential due to Volkswagen’s declining European sales, high labor costs, and excess capacity.
The family has stressed that significant cost-efficiency measures are necessary. Meanwhile, Porsche SE has indicated that it may reduce its stake in Volkswagen by up to 40%, citing financial planning concerns and ongoing uncertainty. The holding company is already burdened with substantial debt from other investments, including in Porsche AG, which could be worsened by falling dividends and a reduced Volkswagen stake.
Volkswagen previously rejected union proposals that suggested slashing dividends and bonuses, and cutting working hours to save about €1.5bn. Instead, the car manufacturer is considering laying off thousands of German employees, closing factories for the first time in the country, and reducing salaries by 10%. Volkswagen has set a target of saving approximately €10bn.
The prospect of lower dividends has led the Porsche-Piëch family to engage more actively with Volkswagen’s unions, which they had previously sought to avoid. Ongoing wage negotiations with German unions IG Metall and AG are in their fifth round, with the threat of Christmas strikes growing. Workers have already staged two walkouts in the past month.
