Volkswagen chief executive says situation 'alarming,' cuts needed

The chief executive of Germany's Volkswagen Group has described the situation at the company's core VW brand as "alarming," days after plans for spending cuts and potential plant closures in its home market caused outrage among employees.

Writing in the Sunday edition of the Bild newspaper, Oliver Blume said radical changes were needed to ensure the survival of the carmaker.

Fewer vehicles are being purchased in Europe, Blume said, while new competitors from Asia are entering the market.

"The pie has gotten smaller and we have more guests at the table," he added.

The European auto industry is facing unprecedented challenges, Blume argued. "And the economic environment has worsened again, especially for the VW brand."

Despite the downturn, Volkswagen will not abandon its home country, Blume promised.

"We are firmly committed to Germany as a location, because Volkswagen has shaped entire generations. We have employees whose grandfathers also worked at Volkswagen. I want their grandchildren to be able to work here, too."

Volkswagen has never closed a plant in Germany, and has not shut down a factory anywhere in the world since 1988.

However, disappointing sales have led management to consider wide-ranging reforms, to the fury of the company's employees.

Some 25,000 workers gathered at Volkswagen's headquarters in the northern city of Wolfsburg this week to hear management defend the planned cuts.