Volkswagen to halve model range and cut output to 9 million vehicles as China sales slump 36.6%

Restructuring plan announced

Volkswagen announced this week a plan to cut its model lineup by up to 50% and reduce annual production capacity to 9 million vehicles from a pre-pandemic target of 12 million. The decision followed a tense Supervisory Board meeting, where employee representatives opposed harsher measures. CEO Oliver Blume described the plan as the next phase of transformation to make the group faster, more resilient, and competitive.

With our future plan, we are moving to the next phase of the transformation by our own means. We are making the Volkswagen Group faster, more resilient, and more competitive.

Factory closures and layoffs under consideration

German press reports in late June indicated that Volkswagen was examining the closure of four German plants: Hannover, Zwickau, Emden, and the Audi factory in Neckarsulm, and the elimination of up to 100,000 jobs. Internal documents for the “Target 2030” strategy later suggested the figure could reach 120,000, with 50,000 positions already agreed and an additional 55,000–70,000 under review. The company said it would rely on voluntary measures such as early retirements, voluntary departures, outsourcing, and transfers.

On 10 July, employee representatives blocked the approval of the layoff and closure plans. Protests erupted outside the Zwickau plant, and the IG Metall union warned of a “major conflict” if the plans proceed. The works council and union have vowed to oppose any job cuts and plant closures.

Skoda Auto states no immediate impact

Skoda Auto, the Czech subsidiary and Europe’s second best-selling brand, said on 11 July that the parent company’s restructuring has no immediate impact on its operations. “This development has no immediate impact on our operations. Activity continues normally,” the company stated. Skoda, which employs over 34,000 people and runs its plants at full capacity, is a cornerstone of the Czech economy, heavily reliant on exports to Western Europe. Analysts cautioned that any deep shifts in Volkswagen could eventually ripple through the interconnected supplier network.

Delivery slump in China drags Q2 global volume down 8.6%

Volkswagen reported that global deliveries fell 8.6% in the second quarter to 2.077 million vehicles (the largest quarterly drop in four years). The decline was concentrated in China, where deliveries tumbled 36.6% year-on-year as the overall Chinese auto market contracted by about 20%. Other regions grew: North America rose 7.7%, Western Europe 1.8%, and Central and Eastern Europe 6.7%.

The Chinese auto market contracted by approximately 20%, and the group was unable to avoid the impact of this decline.

The China weakness mirrors recent results from Mercedes-Benz, BMW, and Porsche, all of which posted lower deliveries in the country. Volkswagen hopes a recovery in the second half, supported by more than 20 alternative-powertrain models tailored for China under its “In China, for China” strategy, though fierce competition from local electric-vehicle makers persists.

Shares near 14-year low as restructuring accelerates

Volkswagen shares have fallen roughly 30% year-to-date, trading at their lowest levels since summer 2010. The restructuring announcement and blocked layoff plans have added to market uncertainty, while the group also faces headwinds from U.S. tariffs and a global auto market slowdown. Negotiations with labor representatives are expected to intensify as the company pushes forward with its reorganization.