Volkswagen Group Cuts Annual Capacity by One Million Vehicles Amid Ongoing Challenges

In 2019, Volkswagen Group sold nearly 11 million vehicles globally and had planned to increase sales to 12 million, but it has not reached that level since. Starting in 2020, the group’s annual sales have consistently remained below 10 million units, falling short of its current production capacity. Recently, Volkswagen Group CEO Oliver Blume announced plans to further cut annual production capacity by 1 million units. He stated that the combination of current geopolitical challenges and overcapacity has made the company's long-term operations unsustainable, and past strategies based on high sales volumes no longer align with today’s market realities and competitive landscape. Blume said the company would try to avoid plant closures but did not rule out the possibility of selling some factories in Europe or China to Chinese competitors. Volkswagen also plans to reduce costs by 20% over the next few years. This is not the first time the company has considered production cuts: in 2024, rumors circulated that it might shut down as many as three plants in Germany. At that time, labor unions were actively negotiating to keep the factories running, and works councils even proposed significant wage reductions. Additionally, in the first half of 2025, Volkswagen incurred losses of approximately $1.5 billion due to U.S. tariff hikes. Last year, sales of the Volkswagen and Audi brands declined, with only Porsche maintaining stable performance. Despite this, the company continues to face multiple challenges.