Volkswagen Plans to Cut Half Its Global Model Range Amid Sales Slump and Rising Costs
Volkswagen Group is preparing to reduce its global model lineup by up to 50% as it faces declining sales, rising costs, and weakening market position, especially in China. The company, which owns brands including Volkswagen, Audi, Skoda, Bentley, and Lamborghini, reported a global vehicle delivery drop of 8.6% in Q2 2024, delivering 2.08 million vehicles worldwide. In China, deliveries plunged 36.6% to 424,300 units due to a shrinking local market and stronger competition from Chinese manufacturers. The Asia-Pacific region outside China also saw a 7.2% decline.
Volkswagen's passenger car brand was hit hardest with a 14% global sales drop in the quarter. Electric vehicle (EV) deliveries, once a growth driver, fell 4.2% globally to 238,400 units. The U.S. market experienced a sharp 49% decline in EV deliveries to 5,800 units, impacted by the expiration of federal subsidies and new tariffs. In China, EV deliveries dropped 35.6%, with Volkswagen passenger EV sales down 22.2%, pressured by local competitors benefiting from government subsidies and better market fit.
In response, CEO Oliver Blume announced the "Future Program," a set of 12 initiatives aligned with the company’s 2030 vision. This includes gradually cutting the model range by up to half and reducing product complexity by up to 75%, focusing on the most attractive market segments. Blume emphasized the need to simplify product portfolios, technology platforms, production volumes, and decision-making processes. In the U.S., this may lead to discontinuing niche models like the Golf R, Jetta GLI, and Audi e-tron GT.
Volkswagen also plans to reduce its global production capacity from 10 million to 9 million vehicles annually, down from 12 million pre-pandemic, which could result in significant job cuts. Although CEO Blume considered closing four German plants and cutting up to 100,000 jobs, employee representatives on the board have so far blocked these moves. Another potential financial strategy includes spinning off luxury brands such as Lamborghini and Ducati, similar to Porsche’s successful IPO.
Despite challenges, Volkswagen saw growth in South America (+9.4%), Western Europe (+1.8%), and Central and Eastern Europe (+6.7%) in Q2. European EV order backlogs increased by over 50% compared to late 2023, driven by popular models like the ID. Polo, Skoda Enyaq, and Cupra Raval, which together have over 54,000 orders.
