One of Germany’s largest asset managers, Union Investment, has warned Volkswagen that its credit rating could drop to “junk” unless the carmaker slashes costs, escalating tensions ahead of a critical board meeting on Friday. Management and supervisory boards are deadlocked over CEO Oliver Blume’s restructuring plan, which could eliminate up to 100,000 jobs in Germany and close as many as four plants. Worker representatives and Lower Saxony, a major shareholder holding 20% of voting stock, oppose the plan.

Union, which holds a 0.1% equity stake and €1bn in bonds, cautioned chair Hans Dieter Pötsch that a credit downgrade would raise financing costs and limit future investment capacity. Current ratings place VW three notches above non‑investment grade, with S&P’s outlook already negative. The company faces a protracted battle with labor, and if no agreement is reached, it may bypass the supervisory board via an extraordinary shareholder meeting.

Blume argues the overhaul is essential to make Europe’s largest automaker more agile against Chinese rivals, noting that the whole industry is struggling. VW’s H1 2026 sales fell over 8% and operating profit dropped 11.6% amid a China slump and new competition, prompting a cut in its 2026 guidance. Union urged the supervisory board not to interfere with day‑to‑day management, stressing that timely, sound decisions are the responsibility of the management board under Germany’s two‑tier governance.

VW declined to comment, while German union IG Metall highlighted a law requiring 80% shareholder support for key decisions, giving Lower Saxony a de facto veto. Porsche SE, the vehicle for the Porsche‑Piëch family’s 53% stake, also declined comment. Pötsch, who also serves as CEO, has not yet responded.