VW CEO says ‘the roof is on fire’

IT COULD have been a lyric from a Bloodhound Gang song, instead the dire warning comes from none other than Volkswagen CEO, Thomas Schaefer, who said that the company’s perilous financial state means, “The roof is on fire”.

The critical statement, as published by Wards Auto, was made as part of a fiery hour-long meeting to more than 2000 internal managers this week where Mr Schaefer called for an immediate freeze on spending across all areas of the business.

With Volkswagen Group facing unprecedented tough financial times, Mr Schaefer detailed the severity of issues facing the company as it seeks to become a global leader in the manufacture of electric vehicles while at the same time continuing to produce internal combustion powered models.

According to the report, Mr Schaefer said, “We are letting the costs run too high in many areas” and said that the months ahead will be “very tough”, calling on staff to make “small wins” as they go about their roles.

Mr Schaefer said he planned to introduce a series of “performance programs” with the aims of saving the company up to €10 billion ($A16.5b) over the next three years. The so-called performance programs have already been discussed at a board-member level, he said.

The calls to tighten the purse strings come as Volkswagen faces a downturn in sales in its largest market, China, where it has been forced to discount many of its more profitable models amid strengthening domestic competition, both in ICE and electric vehicle segments.

Earlier this week, Volkswagen Group company Audi indicated it would look to China’s SAIC to source its next electric vehicle platform as the planned VW-sourced SSP modular system faced cost-related delays.

The company will also look to introduce its all-electric ID.7 sedan in Europe within months, and has plans to unveil its next-generation (ICE-powered) Tiguan and Passat ranges globally before the end of the year.

Mr Schaefer, a former chief operating officer at Volkswagen prior to his promotion to CEO in July last year, appealed to managers to instigate changes aimed at making the company leaner and more agile.

“Our structures and processes are still too complex, slow and inflexible,” he said, calling on his managers to show “VW team spirit more than ever”.

In a follow-up address during an internal meeting of senior Volkswagen managers, chief financial officer, Patrik Andreas Mayer, said, “Our vehicle business is unwell”, before describing Mr Schaefer’s address as a “last call”.