Has Volkswagen’s CEO Got What It Takes?

A live test of Political Dexterity, born from a succession of Galileo Dilemmas.

I have spent over two decades studying how power actually moves inside large organisations. Not how it is described in annual reports, but how it behaves when a system is finally forced to change. Volkswagen is currently offering the clearest live illustration of that process available anywhere right now. This week it produced its first real result.

A system built to resist exactly this

Effective voting control at Volkswagen is concentrated among three shareholders with materially different interests. Porsche SE, the holding company of the Porsche and Piëch family, controls the largest bloc. The German state of Lower Saxony holds twenty per cent of the voting rights. Under the Volkswagen Law, that is enough to give it an effective veto over certain fundamental shareholder decisions. Qatar Holding, associated with the Qatar Investment Authority, holds a further significant position. Alongside this, Germany’s co-determination system gives employee representatives half the seats on the supervisory board. That is institutional power that exists independently of who owns what.

This structure exists to protect the company’s stability. For decades, it has worked. It has also meant that radical change of the kind now being proposed cannot happen without overcoming resistance the structure was specifically built to provide.

A succession of unabsorbed shocks

The pressure has not arrived from a single direction. The diesel emissions scandal damaged the company’s reputation and cost billions. The shift to electric vehicles disrupted a business built around combustion engineering. Porsche’s reversal of its own earlier EV strategy generated approximately €2.4 billion in related charges, reflecting product strategy, margins and market conditions rather than any single cause. Covid collapsed demand and then exposed fragile supply chains. Delays and disruption inside its software operation, CARIAD, compounded the difficulty. Now Chinese competitors, US tariffs and shrinking German factory utilisation are converging at once.

Together, these created a succession of Galileo Dilemmas: moments at which absorbing the implications fully would have required Volkswagen to question assumptions bound deeply into its identity, operating model and institutional arrangements. Individually, each pressure might have been absorbed. What appears to have broken is the system’s capacity to absorb their combined implications before the next arrived.

What Blume attempted

CEO Oliver Blume took the resulting plan to the supervisory board on 9 July. Reported to include job losses of up to 100,000 worldwide and the closure of four German plants, Hanover, Emden, Zwickau and Audi’s Neckarsulm, the proposal went well beyond what was agreed. In December 2024, Volkswagen had reached an agreement with labour representatives under which no German plant would close (see Reuters News)..

Alongside it, Blume has already been reshaping the organisation underneath him. Leadership positions are being cut from around 21,500 to roughly 16,000, replacing layered committees with a flatter structure built to shorten decision chains. The individual-performance component of management bonus is being raised substantially, from roughly 15 to 35 per cent, alongside a new evaluation framework the company calls its Impact Index. It is a deliberate move away from reward based on collective, corporate-wide metrics toward reward based on individually demonstrated capability. The Automated Driving Alliance with Bosch has been brought to an end. Volkswagen has agreed to sell a 51 per cent stake in its industrial and marine-engine business, Everllence, to Bain Capital.

The verdict, so far

On 9 July, the supervisory board voted 12 to 7 against management’s reported proposal, driven by opposition from the labour side. Lower Saxony reportedly attempted to broker a compromise before the vote (see Reuters News). That attempt did not hold. Volkswagen’s public statement afterwards omitted any mention of the 100,000 jobs or four closures, setting out instead the less contentious commitments to halve the model range and reduce excess capacity, measures that did not require the same board approval.

This is not the end of the story. It is the first result. Blume forced Volkswagen’s problem into the open, in specific and severe terms. He has not yet assembled the coalition required to act on it at that scale.

Even this defeat is not conclusive evidence that Blume misread the politics. A failed first proposal can expose the real boundaries of resistance, clarify who controls what, and change the terms of the negotiation that follows. Whether this was a calculated opening move or a genuine failure to assemble support will become visible only through what he does next.

Reading the pattern, not the people

I have no inside knowledge of Volkswagen. I do not know who inside that organisation argued for the plan, who opposed it, or how the coming negotiations will resolve. No outsider can see that internal political picture in full.

What is fair to say is this. Getting a plan of this severity as far as a formal board vote required Blume to form a diagnosis of Volkswagen’s position serious enough to challenge deeply protected interests. It required judgement under real uncertainty about how far that challenge could go. Whether that diagnosis is correct, and whether his judgement is astute enough to match what the position demands, remains unproven. The vote itself is evidence only that the confrontation was real. It is not yet evidence of who will win it.

His continued position as CEO, despite a share price trading near sixteen-year lows, Porsche’s reversal, and his relinquishment of the additional Porsche CEO role at the start of this year, shows only that Volkswagen’s governing coalition has not yet converged on removing him. Whether that reflects confidence in his capability, the absence of an acceptable alternative, or simply the difficulty of reaching agreement inside a divided structure cannot be known from outside. Two of his predecessors, Herbert Diess and Bernd Pischetsrieder, ultimately lost their positions to exactly this kind of labour opposition. Blume is not there yet. He is also not through it.

Whether he has enough Political Dexterity to land the transformation, rather than simply begin it, is the question this piece cannot answer. What is already clear is that the first real test has taken place. Blume forced the confrontation, and lost the opening round.

Colin Gautrey, 10th July 2026