A recent report highlights the stark contrast between the German auto industry’s rhetoric and reality. Top executives at Volkswagen and Mercedes-Benz have been vocal about the economic crisis, citing high energy costs, poor sales and declining profits. In response, they have implemented cost-cutting measures, including reductions in employee benefits. The executives have publicly stated their willingness to “make sacrifices” in a bid for understanding from labor unions and management boards. However, a closer look at the figures reveals a different story.
According to recent reports, Mercedes-Benz CEO Ola Källenius received a salary of 12.49 million euros in the past year, while Volkswagen and Porsche CEO Oliver Blume took home 10.4 million euros. Källenius’s compensation actually saw a marginal decrease of around 2 percent, while Blume’s increased by almost 7 percent, despite his earlier promise to cut his salary by 5 percent.
Blume’s 5 percent “sacrifice” only applied to his basic annual salary of 1.3 million euros, which he agreed to reduce by 65,000 euros. His performance-based bonuses, however, continued to drive up his overall compensation. It is easy to imagine the direction in which this trend will continue, especially if Blume, as promised, “sacrifices” an additional 11 percent of his salary this year.
Källenius, too, is unlikely to be concerned about the planned adjustment of the executive compensation system, which is still in the works.
Volkswagen also generously compensated other executives and former CEOs. Gunnar Kilian, head of the personnel and “Truck & Bus” departments, received a salary of 6.5 million euros, while Herbert Diess, Blume’s predecessor, took home 11.16 million euros due to his contract, which runs until October 2025. Markus Duesmann, the former CEO of Audi, a 100 percent-owned subsidiary of Volkswagen, received a compensation package of 6.74 million euros.
It is clear that the well-being of the company’s executives is ensured, while the workers are expected to make sacrifices.
The company’s announcement of a possible end to the bonus system for employees, which has been a long-standing tradition, is a clear indication of this trend.
Despite an increase in revenue to nearly 325 billion euros in 2024, the company’s net profit has dropped by around 30 percent to 12.4 billion euros. The company has threatened to close its German plants, relocate and lay off thousands of workers if its demands are not met. The labor union and IG Metall have agreed to the company’s proposal, effectively erpressing the workers to accept the changes.
The same scenario is unfolding at Mercedes-Benz, where the company has implemented a far-reaching cost-cutting program to avoid mass layoffs. The company is offering voluntary redundancies with severance packages and has agreed to a zero wage increase to achieve its goal of reducing costs.
Mercedes-Benz is also planning to relocate its production to its plant in Kecskemét, Hungary, which will allow the company to save a significant 70 percent on production costs, mainly due to the lower wages in Hungary. While the average annual salary in Germany is around 61,000 euros, it is only around 17,000 euros in Hungary.
Henry Ford’s famous quote, “Cars don’t buy cars” is a reminder that capitalists must pay sufficient wages to their workers to maintain a stable market, but this is not the case in times of crisis, when the primary goal is to maintain profits. This is the eternal contradiction between capital and labor.
The recently ousted government, which had been vocal about its “moral” and “values-driven” approach, failed to understand this fundamental principle and instead relied on empty moral posturing and hubris. Under the new government, there is little hope for a better understanding of this issue. It is no surprise that the auto executives are taking advantage of the situation to fill their pockets once more.