Volkswagen outlined a sweeping restructuring plan Thursday that would reduce its model lineup by up to half and cut global production capacity to 9 million vehicles per year, as the German automaker faces rising costs, intensifying competition in China, and the pressure of U.S. tariffs.
Equipment options will shrink by as much as 75%, the group said, with the savings in development resources redirected toward higher-value products, while the remaining portfolio is narrowed to segments Volkswagen considers most commercially attractive. The company also said it will align technology platforms, electronic architectures, and software systems across its global operations to eliminate duplication and capture group-wide efficiencies.
The production capacity target of 9 million units represents a significant pullback. That target marks a sharp retreat from the roughly 12 million vehicles per year the company had been equipped to build before the pandemic; since then, Volkswagen has already wound down 2 million units of that capacity, split between China and Europe. Further reductions are planned in both China and Europe, the company said.
Despite the scope of the plan, Volkswagen stopped short of announcing specific job cuts or factory closures, according to The Wall Street Journal. Two unnamed sources told Reuters that worker representatives on the supervisory board succeeded in blocking a more sweeping overhaul when the board convened Thursday, according to CNBC.
"Geopolitical tensions, high costs including those caused by tariffs, increasing regulation and ever more intense global competition are increasing the pressure on the entire automotive industry. That is why we're acting now," Volkswagen CEO Oliver Blume said in a statement.
Also on Thursday, the company disclosed that it handed over 8.6% fewer vehicles to customers worldwide in the second quarter compared with a year earlier — the worst such reading in four years, according to Reuters. China, which accounts for more of Volkswagen's global volume than any other single market, saw deliveries crater by 36.6%, while North America, Western Europe, and Central and Eastern Europe all posted gains.
By Friday morning, Volkswagen shares had slipped 0.8%, extending a prolonged decline that has erased more than 30% of their value since the start of 2026.
The restructuring plan builds on moves the company had been weighing for several weeks, including reported plans to eliminate up to 100,000 positions and close German plants at four locations: Hanover, Zwickau, Emden, and Neckarsulm, where Audi operates a facility. A union deal struck in late 2024 had already committed to eliminating around 50,000 positions by 2030. Both IG Metall and the General Works Council have vowed to resist any closures or headcount reductions beyond what was previously negotiated. On Thursday, workers gathered outside the Zwickau factory in a demonstration the union organized in response to the reports.
The group also said it sold a majority stake in a unit called Everllence at the end of June, generating approximately €7.4 billion in cash to strengthen its balance sheet.