Volkswagen aims to cut its model lineup by as much as half and will continue to reduce manufacturing capacity, part of a move to slash expenses as it grapples with high costs, intensifying competition in China and the rising threat of Chinese competitors expanding in Europe.
The German automaker recently warned that the next few years would be critical for the company and that it needed to find efficiencies beyond its previous plans as it prepares for muted vehicle-delivery volumes and a permanently volatile market.
In a fresh project that was presented to the company's supervisory board Thursday, Volkswagen said it will gradually cut its model lineup by up to 50% as it concentrates on only the most attractive market segments. It will also adjust capacity in its production network to the current market reality.
"The global situation has continued to deteriorate over the past twelve months," Chief Executive Oliver Blume said in a recorded message following the meeting.
"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," he said.
The plans come on top of a previously agreed deal that was reached with the company's powerful union over 18 months ago that committed to billions of dollars of cost savings and 35,000 job cuts in Germany by the end of the decade while averting immediate factory closures in the country. A further 15,000 cuts had been agreed across Volkswagen's Audi and Porsche brands as well as its Cariad software unit.
As part of that plan, the group cut overhead costs by 1 billion euros in the first quarter of this year but had cautioned that further action would be needed to bring costs down further through reducing manufacturing costs, lowering overhead costs, and speeding technology development and decision-making.
The group's sprawling production network is also on the block. Having recently had global manufacturing capacity of around 12 million vehicles, Volkswagen has moved to remove 1 million units of capacity in China and 1 million in Europe and had said it would target a further 1 million unit reduction across China and Europe.
That would bring global production capacity down to 9 million units, in line with the number of vehicles it sold last year.
However, the company stopped short of announcing job cuts or factory closures Thursday.
Nationwide protests by shop stewards and works council members across the Volkswagen Group took place Thursday against reported plant closures and job cuts.
Metal workers union IG Metall said the protests were triggered by reports about the extent of the board's plans.
"According to consistent media reports, up to 100,000 of the approximately 657,000 jobs worldwide are to fall victim to the cost-cutting measures," the union said in a release.
The head of Volkswagen's works council, Daniela Cavallo, said in a separate statement that CEO Blume must address the workforce Friday and address the rumors.
"If the CEO fails to comply, extraordinary works meetings will be held simultaneously across VW after the summer break to summon the management board members to the microphone."
Volkswagen didn't immediately reply to a request for comment.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
July 10, 2026 02:07 ET (06:07 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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