Volkswagen Advances "Future Plan": Streamlining Models, Cutting Jobs, and Closing Plants to Tackle Crisis

Volkswagen Group announced on July 9, 2025, the advancement of its "Future Plan," aimed at addressing ongoing operational pressures through a series of cost-reduction and efficiency-enhancement measures. The plan includes reducing the number of vehicle models by up to 50%, cutting product configuration complexity by as much as 75%, consolidating technical platforms, electronic architectures, and software systems to minimize redundant R&D efforts, and adjusting production systems to align annual capacity with approximately 9 million vehicles. The Group stated that over the past three years, it has already completed strategic adjustments in products, technology, and regional operations and offset billions of euros in external cost pressures through cross-brand performance initiatives. On the same day, Volkswagen held a Supervisory Board meeting to discuss a new round of cost-cutting proposals. According to disclosures, the proposal could involve eliminating 100,000 to 120,000 jobs globally and restructuring its German manufacturing footprint. Four German plants—in Zwickau, Hanover, Emden, and Neckarsulm—are at risk of closure: production at the Zwickau and Emden facilities is slated to be phased out over the next five years; the Hanover commercial vehicle plant is scheduled to close in 2032; and the Neckarsulm Audi plant is planned for closure in 2034. Together, these four plants employ around 40,000 workers. Previously, Volkswagen had announced plans to cut roughly 50,000 jobs in Germany by 2030, encompassing the Volkswagen brand as well as subsidiaries such as Audi and Porsche. In response to these plans, Germany’s metalworkers’ union (IG Metall) organized protests across multiple locations on the same day, opposing plant closures and layoffs. The government of Lower Saxony also expressed opposition, arguing that shutting down factories is not an effective path for corporate development. Financial data shows that Volkswagen’s total revenue for 2025 amounted to approximately €321.91 billion, down 0.8% year-over-year; operating profit stood at about €8.9 billion, a 54% decline from the previous year—the lowest since 2016; and net profit after tax fell from €12.4 billion in 2024 to €6.9 billion in 2025, a drop of roughly 44%. The Group attributed the profit decline primarily to four factors: approximately €3 billion in losses from newly imposed U.S. import tariffs, costs related to Porsche’s product strategy realignment, foreign exchange losses due to currency fluctuations, and intensified global price competition combined with shifts in product mix that compressed margins. In the first quarter of 2026, Volkswagen delivered 2.0489 million vehicles globally, a 4% year-over-year decrease. Deliveries in China totaled 548,700 units, down 14.8% year-over-year, while North American deliveries declined by 13.3%. Only Europe and South America saw growth, rising by 4.7% and 7%, respectively. Revenue for the quarter reached €75.657 billion, down 2.5% year-over-year, and operating profit was €2.463 billion, a 14.3% decline compared to the same period last year. In the Chinese market, Volkswagen delivered 2.69 million vehicles in 2025, an 8.0% year-over-year decrease—marking the second consecutive year of decline. In March 2026, rumors circulated about Škoda exiting the Chinese market. Volkswagen China responded by stating that Škoda sales in China would continue until mid-2026, after which warranty and after-sales services would still be provided. The company emphasized that Škoda would focus on high-growth markets such as India and ASEAN, while reaffirming that China remains central to Volkswagen’s global strategy. As the world’s second-largest automaker, Volkswagen delivered 8.9839 million vehicles globally in 2025, a slight 0.5% year-over-year decline. Meanwhile, Toyota (including Daihatsu and Hino) reported sales of 11.3226 million vehicles, up 4.6% year-over-year, widening the gap between the two automakers to approximately 2.3 million units. Since being overtaken by Toyota in 2020, Volkswagen has not regained the top spot in global vehicle sales.