Volkswagen is at a crucial point in its history. There were also critical phases in earlier decades – for example at the beginning of the 1990s, when the introduction of a four-day week prevented the biggest sales slump to date from being followed by tens thousands of job cuts. Now, however, Wolfsburg is not only missing sales in important markets. There are also important and expensive investments to be made in future technologies, which are associated with high implementation risks.

Compared to the sales record in the last year before the coronavirus crisis, the Wolfsburg-based company is likely to deliver around 2 million fewer vehicles worldwide in 2024. In Europe, where VW is the largest manufacturer with a market share of 25%, there may be a permanent shortfall of half a million sales. Perhaps even more if the group does not succeed in building on the success of the Beetle and Golf from the combustion engine era with an electric car for a broad range of buyers in the foreseeable future.

From the point of view of VW employee representatives, the Board of Management has broken a taboo by cancelling a job guarantee that has been in place for three decades, as well as for the first time not ruling out plant closures in Germany. The move shows how serious the situation is. Especially as there is a lack of success in other important regions.

In China, the world's largest sales market, VW must also significantly reduce costs in order to play a significant role in the electric segment in the future, and to assert itself against the Chinese competition. The Wolfsburg-based company is a long way from previous earnings levels in China. In the USA, it is still not clear whether VW will succeed in more than doubling its market share to 10% by 2030 as planned.

The VW Passenger Cars core brand in particular must become competitive. The car manufacturer cannot afford to implement much less than the additional cost-cutting measures proposals that have been revealed by the Works Council. At the same time, the proposals are likely to contain some room for negotiation. As in other crises, they will strive for a face-saving solution in Wolfsburg: the management, which wants to increase the operating margin of the core brand to 6.5 per cent by 2026 from the current 2.3 per cent, as well as the employee representatives and the major shareholder Lower Saxony, who want to prevent the closure of sites. This time, however, VW needs a big move in order to remain competitive in the long term. It seems inevitable that this will cause deep wounds.