Volkswagen chief executive Oliver Blume has called on European policymakers to establish stronger conditions for domestic manufacturers to compete with lower-cost Chinese automakers, noting that the German group’s restructuring will succeed only if companies and governments act together to protect the region’s industrial competitiveness.
Speaking at an event titled “For Europe” on Sunday, ahead of the Paris motor show, Blume backed proposed European Union measures to encourage local manufacturing and welcomed a reported agreement between Brussels and Beijing that could cut Chinese imports of plug-in hybrid vehicles into the bloc by more than half.
His remarks come as Volkswagen undertakes what he described as “the biggest transformation programme in our history”, seeking to reduce complexity across its extensive portfolio of brands while developing more affordable electric vehicles. The company is under pressure from weakening demand in key markets, intense competition in China and the growing presence of Chinese manufacturers in Europe.
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The restructuring has already involved plans for sweeping job cuts, with Volkswagen also threatening to close up to four plants in Germany. Yet reducing costs and capacity alone may not be sufficient to restore its competitive position. Investors are also demanding evidence that the turnaround will improve product development and software capabilities, areas that have become increasingly important in the transition to electric and digitally connected vehicles.
“This is a shared responsibility: The business community must become more competitive and create attractive opportunities, while policymakers must establish the right framework conditions,” Blume said.
The statement captures the tension confronting Europe’s automotive industry. Manufacturers must improve their own efficiency and product offerings, but they are also seeking policy intervention as Chinese rivals expand abroad amid an increasingly severe price war in their domestic market.
Blume’s support for proposed “Made in Europe” rules reflects growing pressure within the European automotive industry for policies that encourage production and job creation within the bloc.
Under the approach he advocated, companies selling vehicles in Europe should operate under comparable conditions and contribute to the region’s manufacturing base rather than relying primarily on imports.
“Those who sell here should compete under comparable conditions and create jobs and value here in Europe too,” Blume said at the event, which was attended by France’s industry minister, Sebastien Martin.
The proposed rules are part of a broader debate over how Europe can maintain its industrial capacity while managing competition from Chinese manufacturers that have expanded rapidly through lower-priced electric and hybrid vehicles.
Chinese automakers have been gaining ground as they confront an increasingly competitive domestic market. Pressure on sales and pricing in China has encouraged companies to seek customers abroad, increasing the likelihood that discounting and excess production capacity will affect markets beyond the country.
For European manufacturers, the concern is not just that Chinese brands are taking market share. A prolonged price war could also force established automakers to reduce prices to remain competitive, putting pressure on margins at a time when they are investing heavily in electric vehicles, batteries and software.
Volkswagen is particularly exposed because of its size and breadth. The group spans mass-market brands such as Volkswagen, Spain’s Cupra and the Czech Republic’s Skoda, as well as premium and luxury marques including Porsche and Lamborghini. That portfolio gives it a broad presence across the market, but also creates organizational complexity and a wide range of product-development requirements.
Blume said Volkswagen was working to simplify the group, suggesting that internal restructuring and external policy support are being pursued as complementary responses to the competitive challenge.
The company’s market position remains substantial. Volkswagen is by far Europe’s top-selling automaker and has maintained a market share of roughly a quarter over the past decade. However, its established scale has not insulated it from the pressure created by Chinese entrants such as BYD and Leapmotor.
The growing popularity of these manufacturers in Europe reveals the changing nature of competition. Established brands can no longer rely solely on their existing customer bases and manufacturing networks if lower-priced rivals offer electric vehicles that appeal to cost-conscious buyers.
Affordable Electric Vehicles Become Central to Volkswagen’s Turnaround
The Paris motor show provides Volkswagen with an opportunity to demonstrate how its product strategy is evolving in response to that pressure. The company is presenting a range of more affordable electric vehicles across its volume brands, including Volkswagen, Cupra and Skoda. It will also premiere its new ID. Tiguan electric SUV.
The emphasis on affordability is deemed necessary because price has become a central battleground in the transition to electric mobility. Manufacturers must persuade consumers to switch from conventional vehicles while competing with rivals that can offer lower prices.
Volkswagen’s challenge is to reduce costs without undermining product quality, profitability or the development of technology needed to remain competitive over the longer term. The group’s restructuring therefore extends beyond workforce reductions. Investors want evidence that management can translate lower complexity and operating costs into better vehicles, stronger software, and products that can compete effectively with Chinese alternatives.
Job cuts and plant closures may improve the cost base, but they do not automatically create more attractive products. Volkswagen must also respond to changing consumer expectations and the rapid pace of innovation in electric vehicles.
The company faces these demands while attempting to manage the financial burden of transforming a large, established automotive business. Its extensive brand portfolio and manufacturing footprint provide scale, but also make rapid changes more difficult than they may be for newer competitors operating with different cost structures.
Blume’s call for policymakers to establish the right conditions suggests that management believes the outcome will also depend on the rules governing competition in the European market.
EU-China Trade Agreement Offers Potential Relief, But Risks Remain
Blume welcomed the understanding reached between the EU and China that could reduce Chinese plug-in hybrid imports into Europe by more than half over four years. The arrangement offers a possible route to limiting competitive pressure on European manufacturers without relying exclusively on tariffs. However, its practical effect will depend on implementation, and it does not resolve the wider challenges facing the industry.
The broader EU-China trade dispute has expanded beyond electric vehicles to include concerns about industrial competitiveness, market access and restrictions affecting other European exports. European policymakers are now under pressure to demonstrate that their trade policy can protect domestic production while avoiding further escalation with Beijing.
Analysts expect restrictions on selected imports to provide some breathing room for Volkswagen and other European automakers. But trade measures alone cannot guarantee a successful industrial recovery if European manufacturers remain unable to match rivals on price, product development and technology.
There is also a risk that stronger protection for domestic producers could reduce competitive pressure to improve efficiency. The longer-term test for European policy is whether it supports investment and manufacturing capabilities while allowing companies to develop products that consumers want at prices they can afford.
The challenge is becoming more urgent as competition in China spills into overseas markets.
Gregor Williams, an analyst at Rhodium Group, said the European automotive industry had become increasingly concerned about the competitive threat emerging from China.
The downturn in China’s domestic auto market is adding to pressure on manufacturers to find export markets, he said.
“It’s one thing to lose revenues,” Williams added. “But if China also manages to export the price war, the European market could become very unprofitable.”
His warning points to a potentially more damaging phase of the competition. Losing sales to foreign rivals is one problem for established automakers; being forced into sustained price reductions across an entire market could threaten profitability even for companies that retain substantial sales volumes.
Therefore, Volkswagen’s response will require more than a reduction in costs or a favorable trade agreement. It must demonstrate that its restructuring can produce competitive electric vehicles while protecting margins and improving its technological capabilities.
Blume is seeking support from European policymakers, but the responsibility he described is shared. Governments can influence the competitive environment through trade and industrial policy, while manufacturers must prove they can adapt their businesses to the changing market.
The Paris motor show comes at a critical point in that process. Volkswagen’s affordable electric-vehicle lineup and restructuring programme is expected to offer an indication of how it intends to respond, but the company’s longer-term prospects will depend on whether those efforts can withstand a price war that is increasingly extending beyond China.