Volkswagen Group "streamlines its lineup", cutting up to 50% of its models

Recently, market rumors have emerged that Volkswagen Group (hereinafter referred to as "Volkswagen Group"), which is advancing its in-depth transformation strategy, has initially drawn up a list of its first batch of models planned for discontinuation, which includes many well-known models familiar to the market.

The rumor spread rapidly on social platforms and sparked widespread discussions. Regarding the rumors of model discontinuation, Times Finance sent an email to Volkswagen Group for verification. The group did not respond to specific models, but stated that "the group will gradually streamline its product portfolio, reduce the number of models by up to 50%, and further concentrate resources on the most attractive market segments."

Up to 50% of Models to Be Cut, Workforce Reduction Expanded to 100,000

Times Finance learned that about a week ago, the Management Board of Volkswagen Group submitted a series of key initiatives to the Supervisory Board, covering 12 action plans and the group's "2030 Goals".

At present, the group has begun to implement the initial initiatives in its future plan, including streamlining the product portfolio and configurations to make products, technologies and R&D more aligned with the needs of different regional markets, adjusting production capacity, and further optimizing the organizational structure and equity investment portfolio. In short, it is a move to narrow its operational focus.

Specifically, Volkswagen Group expects to reduce the number of its models by up to 50%, and further concentrate resources on the most attractive market segments; at the same time, it will significantly optimize optional equipment and configuration combinations, with a maximum reduction of 75%.

In terms of production capacity, Volkswagen Group plans to adjust its total annual production capacity to about 9 million units, so that the production capacity scale can match market demand. Compared with the investment layout based on an annual production capacity of about 12 million units before the pandemic, the group has now completed the production capacity optimization of about 2 million units.

At the same time, Volkswagen Group will further coordinate and integrate key technologies such as vehicle platforms, electrical and electronic architectures, and software ecosystems according to the differentiated market demands in the Eastern and Western Hemispheres, so as to improve efficiency by strengthening internal collaboration and reducing redundant development.

Volkswagen Group stated that the global situation has continued to undergo profound changes over the past 12 months. Factors such as intensified geopolitical tensions, rising costs driven by tariffs, increasingly stringent regulatory requirements, and fiercer global competition have brought higher challenges to the automotive industry, which is already in the deep-water zone of transformation.

The formulation of this comprehensive future plan aims to further enhance the group's ability to cope with external shocks and risks, so as to continuously improve the group's competitiveness.

In accordance with the plan, Volkswagen Group will further focus on its core automotive business, and continuously optimize its equity and investment portfolio to make business operations more focused and more conducive to capital recovery. Guided by this strategy, Volkswagen Group reached an agreement on the sale of the majority stake in Everllence at the end of June this year, and the transaction is expected to bring about 7.4 billion euros in cash inflow to the group.

The news of layoffs spread almost simultaneously.

According to reports from CCTV News, recently, Oliver Blume, Chairman of the Management Board of Volkswagen Group, stated in an internal memo to employees that in order to narrow the cost gap with competitors, the group may cut about 50,000 jobs worldwide. This means that Volkswagen Group plans to expand its global layoff scale to 100,000 people.

Back in March, the group had already announced plans to cut about 50,000 jobs in Germany.

FAW-Volkswagen's June Sales Fell 43.3% Year-on-Year

This is another move of Volkswagen Group's "self-rescue". A number of industry insiders told Times Finance that the above actions are not just a short-term measure to stop financial losses, but a long-term strategic reconstruction of Volkswagen Group in response to the electrification and intelligent transformation of the global automotive industry.

In recent years, under the impact of new energy vehicles, Volkswagen Group's market share has been shrinking rapidly, especially in the Chinese market where intelligent electrification has been fully popularized.

In 2025, Volkswagen Group delivered 8.984 million new vehicles worldwide, falling below 9 million units, a 0.5% decrease compared with the same period of the previous year. Among them, about 2.7 million vehicles were delivered in the Chinese market, including more than 2.57 million fuel vehicles, accounting for over 22% of the fuel vehicle market share.

At that time, Volkswagen Group concluded from this "report card" that it had "further consolidated the group's absolute leading position in the fuel vehicle market". However, the Chinese automotive market has long shown a trend of weakening demand for fuel vehicles, and the situation is continuing to deteriorate.

Data from the China Passenger Car Association (CPCA) shows that in June this year, the overall passenger vehicle market faced pressure and presented significant structural differentiation. The "weakening fuel vehicles, booming pure electric vehicles" trend became the most prominent feature. The "collapse of fuel vehicle demand" promoted the new energy retail penetration rate to quickly exceed 60% and reach 62.8%, and the electrification replacement speed exceeded expectations.

According to the manufacturer sales ranking (narrowly defined passenger vehicles) listed by CPCA for June, FAW-Volkswagen's retail sales in that month were 81,000 units, a 43.3% year-on-year decline, marking the largest drop among the top 10 sales rankings, with a market share of 5.1%; SAIC Volkswagen's sales fell 34.3% year-on-year to 63,000 units, with a market share of 3.9%.

In the top 10 manufacturer retail sales list for May, there were 4 automakers whose year-on-year sales decline exceeded 30%, including both FAW-Volkswagen and SAIC Volkswagen. Among them, FAW-Volkswagen's sales fell 33.2% year-on-year, and SAIC Volkswagen's sales decreased 36.2% year-on-year. Their combined market share was 9.2%, lower than that of BYD (13.7%) and Geely (11.2%).

Times Finance's collation shows that in March this year, although the retail sales of FAW-Volkswagen and SAIC Volkswagen declined year-on-year, their combined market share exceeded 10%; this indicator dropped to 8.7% the following month.

Zhang Xiang, a visiting professor at Huanghe University of Science and Technology, told Times Finance that the global fuel vehicle market is currently shrinking. About 90% of Volkswagen Group's products are fuel vehicles, and the market structure differentiation has led to a sharp decline in its product sales, resulting in a very low capacity utilization rate. "Therefore, some models will become unprofitable, and layoffs and closure of redundant production lines can reduce the operational burden."

Data shows that in the first quarter of this year, Volkswagen Group's operating profit fell 14.3% year-on-year, with an operating profit margin of only 3.3%.

Cui Dongshu, Secretary-General of CPCA, told Times Finance that the current EU policies are chaotic, causing severe losses to the industry. Volkswagen Group's fuel vehicle business has weak profitability, while R&D for electric vehicles continues to "burn cash". Layoffs and cutting low-demand models can quickly reduce costs and restore cash flow.

This also means that large automakers are bidding farewell to the extensive growth model that relies on multi-brand matrices to cover the market, and the industry is shifting from "scale supremacy" to "benefit priority".

Against the Backdrop of Production Capacity Adjustment, the Automotive Supply Chain Is Accelerating Its Differentiation

In the view of Jiang Han, a senior researcher at the Pangoal Institution, this also marks the structural reshaping of the global automotive supply chain and production capacity layout. Multinational automakers must re-examine their global resource allocation to adapt to the new pattern of new energy competition led by the Chinese market.

Volkswagen Group's "elephant turning around" is not an isolated case. Since the beginning of this year, major European automakers such as BMW and Mercedes-Benz have also successively announced measures including cost reduction and business restructuring.

For example, in mid-June this year, BMW Group sharply lowered its performance guidance for the 2026 fiscal year. The expected EBIT margin for its automotive business was reduced from the original 4%-6% to 1%-3%, hitting the lowest profit target in recent years. BMW Group stated in a statement that it will step up efforts to accelerate the implementation of its cost reduction plan, and the relevant cost reduction effects will gradually emerge in the next few years.

There is a consensus in the industry that Volkswagen Group's self-rescue restructuring plan will most likely become a model for other multinational automakers to follow. However, due to differences in trade unions, brand layouts and market structures across countries, the specific implementation may vary from case to case.

Jiang Han emphasized that joint-venture brands must completely abandon the old path of "technological arrogance" and "minor localized adjustments to global models". "Without achieving real 'in-depth localization' in R&D decision-making, product definition and supply chain, relying solely on brand prestige can no longer survive in the extremely 'involution' Chinese market."

On the other hand, the simultaneous transformation of multinational joint-venture automakers will also impact the domestic traditional component supply chain. The huge business lines of traditional suppliers based on internal combustion engine platforms will face a cliff-like decline in orders, and they may be forced to complete capacity clearance and business transformation in the short term.

Jiang Han believes that this will force the domestic automotive supply chain to accelerate domestic substitution and structural differentiation, and local suppliers with core technologies in the three-electric system and intelligent driving will seize the opportunity to fill the market vacuum left by the retreat of joint-venture brands.

Cui Dongshu told Times Finance that in the long run, the demand for traditional fuel vehicle components will continue to shrink, accelerating the forced transformation of enterprises that only provide supporting parts for fuel vehicles. At the same time, as vehicle configurations are simplified, the demand for customized components for multiple versions will decrease, and the supply chain will accelerate its concentration towards leading players, forcing component enterprises to simultaneously deploy businesses in electric drive and intelligent cockpit.

This article is from the WeChat official account "Times Finance APP" (ID: tf-app), written by Wu Dian and Lin Xinlin, and published with authorization from 36Kr.