After interviewing a number of executives in the automotive space, Orwa Mohamad, Analyst at Third Bridge made a series of remarks regarding Volkswagen, informed by insights from industry experts.

Third Bridge experts say the biggest challenge for Volkswagen's German plants is not utilisation but ownership. With the state of Lower Saxony holding a blocking stake and job protections in place until 2030, large-scale plant closures are seen as unlikely. Instead, selling or repurposing sites is viewed as the more realistic option. They also point to an ageing workforce and years of limited hiring as a bigger structural problem than excess capacity.

On China, the experts describe the outlook as make-or-break. Partnerships with XPeng and SAIC should help Volkswagen improve its EV offering, but questions remain over whether the company can develop the in-house software capabilities needed to compete over the longer term. They also believe the high profit contribution China once delivered is unlikely to return as competition from local brands intensifies.

The software gap remains one of Volkswagen's biggest challenges. Compared with Tesla's simpler vehicle architecture, Volkswagen's systems are more complex and expensive to update. The next generation SSP platform is widely seen as critical for the group to narrow the technology gap.

The experts are also sceptical that Volkswagen's core brand can reach its long-term margin targets. High labour costs and legacy manufacturing operations continue to weigh on profitability, making stronger pricing power and better products more important than cost-cutting alone.