Volkswagen’s Biggest Shareholders Sound The Alarm Over Chinese Competition. They Seek a Dramatic Restructuring

Volkswagen's controlling family shareholders have delivered their strongest public endorsement yet of a sweeping restructuring plan, urging management to move faster as Europe's largest automaker battles rising competition from Chinese manufacturers, higher tariff costs and weakening profitability.

The comments came from Porsche SE, Volkswagen's largest shareholder through the Porsche and Piëch families. Volkswagen has already confirmed it is evaluating plans to eliminate up to 100,000 jobs, double the number that had been previously discussed, as part of an effort to restore competitiveness after a sharp earnings decline.

"The Volkswagen Group is at a historic crossroads," Hans Dieter Pötsch, chairman of Porsche SE's management board, said in a statement Friday. "The decisions that Volkswagen makes now will determine its future. For the sake of the company and its sustainable competitiveness, everyone must now step up and take responsibility," he added.

Pötsch also warned that delaying difficult decisions would only deepen the company's worsening challenges, arguing that business realities must take precedence over other considerations.

Johannes Lattwein, Porsche SE's board member responsible for finance and IT, echoed that message, saying it is "imperative" for Volkswagen to reduce excess production capacity, significantly lower costs and strengthen its ability to make and execute strategic decisions more efficiently.

"As the majority holder of Volkswagen AG's ordinary shares, Porsche SE therefore supports the group board of management and its proposals. Competitiveness is the goal," Lattwein said.

He added that "every option must be considered" if Volkswagen hopes to remain competitive against international rivals, warning that failure to act could result in the company permanently losing ground.

The Porsche and Piëch families exercise significant influence over Volkswagen through Porsche SE, which owns 31.9% of Volkswagen's equity while controlling 53.3% of its voting rights. That ownership structure gives their public backing considerable weight as management pursues difficult negotiations over the automaker's future.

The statements accompanied Porsche SE's latest financial results, which showed adjusted half-year earnings after tax of 949 million euros, or roughly $1.1 billion, representing a 14.5% decline from the same period last year.

Volkswagen responded by emphasizing that Porsche SE's comments align with management's strategy. A company spokesperson told CNBC that the shareholder statements confirm Volkswagen's position on its proposed plan and reinforce the urgency of implementing those measures.

Chief Executive Officer Oliver Blume has previously acknowledged the company faces an increasingly narrow window to complete its transformation. Speaking after Volkswagen released its half-year earnings on July 24, Blume said the automaker already has a defined strategy and implementation plan.

"What we do not have is time," Blume said. "That is why we have already started work in many areas and are implementing measures from our future plan." He added that Volkswagen's primary objective is to secure the group's long-term competitiveness despite the mounting pressures facing the global automotive industry.

Those pressures have intensified over the past year as Chinese automakers continue expanding into Europe with competitively priced electric vehicles while Western manufacturers grapple with slowing demand, higher production costs and billions of euros in tariff-related expenses.

Volkswagen Chief Financial Officer Arno Antlitz recently described the current environment as one of the industry's most challenging periods, pointing to trade barriers and the growing flow of Chinese vehicle exports into European markets.

Asked whether Volkswagen could repurpose some manufacturing facilities for defense production instead of closing plants, Antlitz said management remains open to multiple alternatives. "There are various options," he told CNBC in late July. "I'm not looking for job cuts per se and I'm not looking for plant closures per se."

Instead, Antlitz said Volkswagen's focus is on lowering its cost base, improving productivity and increasing factory utilization, adding that management would pursue better alternatives if they become available.