Volkswagen’s Board Confronts a Three-Front Crisis: Strikes, Software Setbacks, and Structural Stalemate

Volkswagen’s supervisory board convened on Thursday for what may be the most consequential meeting in years, tasked with approving a sweeping restructuring plan even as the carmaker battles labor unrest, a failed software partnership, and a valuation gap that leaves its core business effectively worthless in the eyes of the market.

Citi analysts have quantified the anomaly: Volkswagen’s controlling stakes in Porsche and its commercial vehicle holding Traton are worth roughly €44 billion combined, yet the entire group trades at a market capitalisation of just €37.6 billion. That means investors are pricing the core Volkswagen passenger-car and components operations at a negative value — a reflection of deep structural problems that chief executive Oliver Blume has been trying to address with a plan to spin off the core brand and components division into separate legal entities. A similar move would bring them structurally closer to the already separately listed Porsche and Traton.

The biggest obstacle to any such overhaul, however, sits in Hanover. The state of Lower Saxony holds a 20% blocking minority and its minister-president, Olaf Lies, has made clear he will not support measures that erode the traditional system of co-determination. Without a political compromise, Blume’s ability to break up the conglomerate remains severely constrained, and that deadlock is a major driver of the valuation discount.

Parallel to the boardroom drama, labour tensions are escalating. The IG Metall union has called for nationwide protests as management pushes ahead with cost-cutting plans that include shifting production of models originally developed for China into European factories such as Zwickau. Last Friday, more than 4,000 workers demonstrated at the Emden plant alone. The conflict highlights the core disagreement: management sees underused capacity in Europe and wants to redeploy it; workers fear job losses and a dilution of Germany’s industrial base.

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Adding to the pressure, Volkswagen’s software arm Cariad has pulled the plug on its jointly developed Automated Driving Alliance with Bosch after internal assessments deemed the technology uncompetitive. Roughly €1.5 billion had already been sunk into the project. The company is now searching for a new partner, with Mobileye — already working on highway assist systems — considered the frontrunner, alongside British start-up Wayve.

The mounting headwinds are reflected in the share price. Volkswagen stock fell 2.20% on Thursday to €71.28, putting it just 3% above the 52-week low of €69.20 set on July 1. On a month-to-date basis, the shares have lost nearly 18%, and the year-to-date decline stands at roughly 33%. The 200-day moving average of €93.87 remains far out of reach, while the relative strength index at 32.1 signals oversold conditions — but not necessarily a reliable buy signal.

Metzler Bank sees opportunity amid the turmoil, maintaining a buy recommendation and lifting its price target to €130, arguing that the painful restructuring will eventually secure long-term profitability. For now, though, the open conflict over job cuts and the uncertainty around the board’s decision are keeping the stock pinned near its lows.

Investors will have to wait until the board’s verdict later today for clarity on the restructuring’s fate. If the plan is blocked, the standoff between management, labour, and Lower Saxony is likely to intensify. If approved, it would mark a first step toward closing the valuation gap that has left one of Europe’s largest industrial groups trading for less than the sum of its listed parts. The next milestone for Volkswagen’s earnings story comes on July 24, 2026, when second-quarter results are due — but the drama between now and then may determine whether those numbers even matter.