- Soaring costs, declining vehicle sales, and problems in China are raising pressure on Oliver Blume to cede one of his two CEO jobs. The 56-year-old is struggling to contain growing problems that now risk dragging down Porsche and Volkswagen.
Oliver Blume, the part-time CEO of Porsche, is facing pressure to choose between running the luxury sports carmaker or its much larger parent, Volkswagen, amid a growing crisis at both carmakers.
In an editorial published on Tuesday, Germany’s leading business daily Handelsblatt called on the 56 year-old—the only manager to head up two German blue chips simultaneously—to cede the reins at either one or the other.
If he persists, Handelsblatt argues Blume risks dragging down both former paragons of the country’s once-vaunted auto industry.
The German national’s dual role has repeatedly been a source of criticism ever since Porsche shareholders first urged him in June 2023 to prioritize his time by choosing one or the other.
While Volkswagen is far larger in terms of vehicles sold and owns 75% of Porsche, the latter consistently has been worth much more in terms of market capitalization due to its double-digit profit margins.
“With every crisis, the pressure grows on Blume,” the paper wrote. “Should the figures continue to point downwards, the calls for him to end his dual roles will grow louder. Blume should not allow it to get to that point.”
Citing company sources, Handelsblatt reported that Porsche, Volkswagen Group’s cash cow, was forced to cut expenses by roughly €1.5 billion ($1.6 billion) last year, nearly three times the original amount anticipated, as multiple product launch costs were out of control.
This comes after Porsche issued a rare revenue and profit warning in July.
Operating income in the first nine months subsequently tumbled 27%, with the company cautioning about potential unforeseen risks such as tariffs.
While no major import duties have been hiked yet, this is bound to be a hot topic this year for Porsche, which effectively builds all its cars in the European Union.
President-elect Donald Trump, who takes office next week, announced plans to create an IRS for tariffs he is calling the External Revenue Service.
On Monday, Porsche reported a 3% drop in annual vehicle sales due to weakness in China.
Coins2Day could not immediately reach the carmaker for comment.
Who is Oliver Blume?
Blume took the reins at VW late in 2022, when the Volkswagen Group board ultimately decided to sack then-CEO Herbert Diess after repeated clashes with its powerful workers.
Organized labor traditionally plays an outsized role at the carmaker as restitution for being built using funds the Nazis stole from smashed trade unions.
Hailed at the time as a hometown boy who grew up in the shadow of Wolfsburg’s massive car factory, he could be trusted by VW workers to know where his loyalties lie, unlike Diess, an outsider who spent the bulk of his career at Munich rival BMW deep in the south of Germany.
Meanwhile, Blume’s cool, calculated management at Porsche won him the support of the group’s controlling family, whose patriarch developed the original design of the legendary VW Beetle.
Once in place as CEO at both companies, Blume quickly sought to distance himself from Diess’ obsession with Tesla CEO Elon Musk, whom the Austrian once even invited to address the group’s global management team.
China’s debilitating price war
Blume split his work week between Volkswagen and Porsche, an approach that initially appeared to work until problems began to emerge in China.
For over a decade, the country had been the undisputed engine of profit growth for Germany’s vaunted carmakers.
Porsche’s volumes there hit a record of 95,000 vehicles in 2021 despite the still-raging COVID pandemic and a full year of the chip shortage that wreaked havoc with global car production.
However, the country’s largest property developer defaulted on its debt at the end of that same year.
This signaled the start of the Chinese real estate bubble bursting, which has since blighted the economy. In the process, it unleashed an all-out price war in the once-lucrative car market, forcing brands to either participate at the cost of eroding their brand power or suffer a drop in market share.
Over the past two years alone, the number of Porsche vehicles sold to Chinese customers has plummeted 39%, ultimately falling below 56,900 cars in 2024.
