Volkswagen to cut global model range by 50%, targets 9 million-vehicle production capacity in strategic reset

German automotive conglomerate Volkswagen Group has announced a comprehensive strategic plan to boost its long-term competitiveness and respond to a fast-changing marketplace in a more volatile global environment. The company pointed to rising geopolitical uncertainties, increasing operating costs mainly because of tariffs, tightening regulatory regimes and rising global competition as key challenges for the automotive industry during an ongoing transformation.

To meet these pressures, the Volkswagen Executive Board has put together a forward-looking strategy to strengthen the Group’s resilience against external risks while sharpening its focus on its core automotive business. The plan is structured to deliver operational efficiencies, optimise investments and bolster the company’s competitive position in global markets.

Volkswagen to discontinue certain models

Volkswagen will dramatically reduce its product portfolio, including a potential 50 per cent reduction in its model line-up, to focus development and investment on the most attractive vehicle segments, with a priority on technologies and products that deliver the most value to customers and the business. The company also plans to reduce complexity in its offerings, including the availability of equipment and feature combinations, by as much as 75 per cent.

Volkswagen to Reshape Manufacturing Footprint

The German automaker further intends to reshape its manufacturing footprint to align with current market demand and a more competitive industry landscape. The Volkswagen Group plans to align its global production capacity to approximately 9 million vehicles annually. The company's manufacturing infrastructure was designed to support an annual production of approximately 12 million vehicles before the Covid-19 pandemic struck. It has already reduced capacity by nearly 2 million units and plans to implement additional optimisation measures across its operations in Europe and China.

Beyond production, Volkswagen is pursuing greater efficiency across its development, administrative and indirect business functions. The company intends to leverage digital technologies, artificial intelligence, and expanded shared services to improve productivity, accelerate operational processes, and enhance overall efficiency.

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