Volkswagen boss backs EU plan to bolster domestic European industry

Volkswagen's chief executive Oliver Blume has backed EU proposals to bolster Europe's domestic industry, saying European carmakers must be able to compete under comparable conditions with Chinese rivals.

Blume said "Made in Europe" rules proposed by the EU "must reward real value creation in Europe", speaking in Paris before the motor show this week. The proposals, formally known as the Industrial Accelerator Act, would limit subsidies and public procurement to products with a large proportion of their materials and manufacturing coming from within the EU.

The proposed rules are aimed at countering the rapid rise of Chinese brands in Europe in the automotive sector and other important manufacturing industries. Lower-priced Chinese manufacturers have prompted a crisis in several industries. Volkswagen is among the most affected European companies. Germany's biggest carmaker has set out plans to cut as many as 100,000 jobs; Blume called it the "largest transformation programme in its history".

Blume listed challenges facing European carmakers, including high energy costs, lower demand as consumers struggle with high inflation, the need to develop cars more quickly, and intense competition from China. The EU has said it reached a landmark deal with China to halve China's sales of hybrid cars in the bloc.

Blume said German carmakers were happy to compete with Chinese rivals, but added that the EU should reward businesses with significant European footprints. "Companies that invest and develop in Europe must see a clear benefit," he said. "Those who sell here should compete under comparable conditions and create jobs and value here in Europe, too."

He added: "We believe in open markets, but openness also means standing up for our own interests in Europe. Because a strong industrial base means more than economic success. It protects technological independence."

Volkswagen is exhibiting at the Paris motor show for the first time in 20 years. Volkswagen's chief financial officer, Arno Antlitz, said the job cuts were necessary to increase the company's economic power and defend its "home turf". The company is cutting the number of models it offers worldwide from 150 to 75 across brands including Audi and Škoda. On Sunday, it revealed the production version of the ID Tiguan, an electric edition of its bestselling family SUV.