Volkswagen Scraps €1.5 Billion Bosch Alliance and Slashes Management Ahead of Pivotal July 9 Board Vote
Published on 07/03/2026 at 05:46 | Redaktion boerse-global.de
Oliver Blume is dismantling the legacy of his predecessor one piece at a time. The Volkswagen chief has pulled the plug on the group’s high-profile development alliance with supplier Bosch, terminating the “Automated Driving Alliance” effective July 1. The decision shelved a prestige project that had already consumed around €1.5 billion in investment, with internal progress on Level 2++ city driving — a critical industry benchmark — failing to keep pace with rivals. VW will now buy hardware and software externally, abandoning the in-house strategy championed by Blume’s predecessor. The technology developed so far will not be discarded; it will be integrated into upcoming models, starting with the ID.Every1, which rolls off the line in Portugal in 2027.
The Bosch pullout is just one front in a sweeping cost offensive. Blume is simultaneously engineering a radical downsizing of the management structure. The number of management positions is set to fall from roughly 21,500 to 16,000, reorganised into four new tiers: 400 top managers, 1,200 strategic leaders, and 14,400 operational managers on the two lower levels. From 2027, the bonus system will be overhauled: the individual performance share of variable pay jumps from 13–17% to 35%, while the long-term component drops from 50–60% to 40%. A new “Impact-Index” using a star rating system will assess executive performance.
The stakes rise sharply on July 9. On that day, the supervisory board will vote on restructuring plans that could eliminate up to 100,000 positions and involve the potential closure of four German plants: Hanover, Zwickau, Emden and Neckarsulm. Blume has already laid down a blunt ultimatum: if the board rejects the programme, he will call an extraordinary general meeting to force the issue. Resistance is well-organised. IG Metall, the works council, and the state of Lower Saxony — which holds a 20% voting stake — have all voiced opposition. The financial pressure behind the urgency is clear: first-quarter 2026 operating profit slumped 14.3% to €2.5 billion, pushing the margin to a bare 3.3%.
Should investors sell immediately? Or is it worth buying Volkswagen?
The stock market has been unforgiving. Volkswagen shares touched a fresh 52-week low of €69.20 in early July, before staging a modest bounce on Thursday to close at €73.18 — a 3.68% gain. Even so, the stock has shed 31% since the start of the year. The relative strength index stands at 29.8, a strongly oversold reading that often paves the way for short-term technical rebounds. But the equity remains 22.4% below its 200-day moving average of €94.31, and analysts see the first real resistance around €80.
To fund the restructuring, VW is streamlining its portfolio. The sale of battery subsidiary Everllence to Bain Capital for €7.4 billion has been completed, and the group is reportedly mulling the disposal of Ducati or an initial public offering of Lamborghini. Software subsidiary Cariad, already under fire from the works council for losing valuable know-how, will refocus on simpler Level 2 systems and new AI models. Bosch, meanwhile, has already secured contracts with other automakers for the technology developed in the now-defunct alliance.
The July 9 board meeting marks a critical inflection point. Blume’s restructuring roadmap — from factory closures to a leaner, more performance-driven management — will determine whether the group can navigate its deepest crisis in decades. The first concrete test of the new software strategy, however, will only come with the ID.Every1’s market launch in 2027. Until then, the financial verdict on Blume’s overhaul remains suspended.
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