Volkswagen Group to Halve Model Range and Plans to Close Factories in Germany

The situation of the German automotive giant continues to deteriorate, requiring urgent and rather radical measures to save it, but these are meeting resistance from the trade unions and the group’s major shareholders.

This week, Volkswagen Group published sales data for the first half of 2026: sales fell by 6.3% to 4,125,700 vehicles. The largest decline was recorded in China, where sales dropped by as much as 25.9% to 973,000 vehicles.

Also this week, the Volkswagen Group Board of Management, led by Oliver Blume, presented a new anti-crisis plan to the Supervisory Board, which provides for much more extensive cuts than those outlined in the previous plan.

The previous plan, “Zukunft Volkswagen,” was published at the end of 2024 and represented a compromise deal with the trade unions, involving the reduction of 35,000 jobs without closing any plants. Currently, this plan is no longer relevant—the stated measures are insufficient to keep Volkswagen Group afloat.

Rumors about Volkswagen Group’s new anti-crisis plan have been circulating in Western media for the past couple of months, and yesterday the plan was officially presented. The new plan is surprising in that it contains very few specifics. Among the more or less clear measures is the intention to reduce the group’s production capacity from the current 10 million to 9 million vehicles per year and to cut the model range by 50%—while the number of offered model variants and trims should be reduced by 75% at once. Which specific models are planned to be eliminated is still unknown. According to rumors, outdated and poorly selling models from the Chinese lineup will be the first to go.

The new plan also proposes eliminating overlapping structures within the group, divesting assets unrelated to the automotive business, and widely using artificial intelligence to increase productivity and speed up the development of new models.

The new plan does not contain specific proposals on how many workers will have to be laid off or how many plants will be closed. However, as early as last month, informed sources reported that up to 100,000 people could lose their jobs, and in Germany, plants in Hanover, Neckarsulm, Zwickau, and Emden are under threat of closure. These rumors prompted a protest action organized by the IG Metall union at Volkswagen Group’s headquarters in Wolfsburg, but it was more of a warning shot. The real problems for the group could come from mass strikes, like those we saw in 2024 before the publication of the “Zukunft Volkswagen” plan.

Most interestingly, the new anti-crisis plan proposed by the Board of Management was ultimately not approved by the Supervisory Board, which includes representatives of trade unions and key owners, among them the government of Lower Saxony, which supports the unions. According to Reuters, 12 board members voted against the plan, while only 7 supported it. One likely reason for the rejection is that the document is too framework-oriented and lacks many painful details. The group’s leadership, apparently, is deliberately avoiding prematurely disclosing the harshest measures, as this could provoke a new wave of protests and paralyze the operations of European plants.

Since spring, the Supervisory Board has been raising the alarm and directly stating that without radical changes to the business model, the Volkswagen group faces disaster. Therefore, board members expect a more concrete and convincing anti-crisis plan from the management. Oliver Blume and the other directors are not to be envied: they are caught in a vice between EU legislation with its imposition of the green agenda and the conflicting demands of the owners.

Auto Motor und Sport magazine reports that the plant in Osnabrück (Germany), where vehicle production is supposed to cease in 2027, was planned to be sold to the Israeli defense company Rafael for the production of components for the “Iron Dome” air defense system. However, the deal was blocked by the government of Qatar, which also owns a large stake in Volkswagen Group and is represented on the Supervisory Board through its sovereign wealth fund. Thus, the future of the Osnabrück plant is once again up in the air. The same can be said for the entire Volkswagen group. We continue to watch the developments with concern.