Volkswagen CEO: China's Experience Worth Learning for Germany

Volkswagen CEO Oliver Blume recently told German media that Germany can learn a lot from China. He said, “China’s systematic layout based on five-year plans has clear goals, focused priorities, and an optimized industrial structure. Additionally, Chinese companies have strong execution capabilities and rigorous operations, which are very worth learning from.”

In an interview with Bild am Sonntag, Blume stated, “What impresses us the most and is most commendable is China’s high level of execution and willingness to implement. We cannot remain complacent. China’s development model has many aspects we can learn from.” He also pointed out that Volkswagen faces fierce competition in the Chinese market. He admitted that Volkswagen has over 150 competitors in China, and the local market is highly innovative.

Image source: Volkswagen

He also mentioned that although the backlog of orders for the European largest automaker is increasing, the company will continue its current restructuring efforts. To avoid costly overcapacity, Volkswagen is setting clear production cost targets for all its factories, including those in Germany, Europe, and China.

Regarding layoffs in Germany, Blume said, “We will continue to assess capacity in the future, and restructuring will proceed.” Volkswagen previously announced plans to cut about 50,000 jobs in Germany by 2030.

Blume stated that Volkswagen’s production costs in Germany are relatively high (especially labor costs), “We must improve production efficiency to offset this disadvantage. Energy costs in Germany are too high, and regulations are overly complicated.” He also added, “The times have changed. The old model of R&D, manufacturing, and exporting cars solely from Germany is no longer feasible.” Due to tariffs, heavy investment in electric vehicle R&D, and fierce competition from Chinese automakers, Volkswagen expects its operating profit margin this year to be as low as 4%.