Volkswagen’s Strategy to Overcome Crisis: Reducing Model Range

Volkswagen Group, one of the world’s largest automotive manufacturers, has decided to tackle its severe crisis by reducing the number of models offered by its key brands by up to half, rather than closing factories and laying off tens of thousands of employees.

Volkswagen, which had been targeting the dismissal of 100,000 workers and the closure of four factories, was forced to abandon these drastic measures involving large-scale layoffs and plant shutdowns after opposition from labor unions.

The company, which owns brands including Audi, Porsche, Bentley, Škoda, SEAT, CUPRA, and Lamborghini alongside Volkswagen itself, will instead focus on reducing global production capacity and cutting the number of models across its brands by up to 50 percent.

Volkswagen CEO Oliver Blume had aimed to rescue the group by reducing employment and production and creating a leaner structure, amid concerns over intense competition from Chinese automakers and billions of euros in additional costs caused by new U.S. tariff policies.

Under the latest decision, Volkswagen plans to reduce annual production capacity from 10 million vehicles to 9 million vehicles and gradually transform its product portfolio by cutting the number of models by up to 50 percent. However, the company has not disclosed which brands or models will be discontinued.

The key question remains whether these new measures will be enough to save Volkswagen Group, which has struggled to compete with Chinese brands and Tesla in terms of cost and technology after falling behind in the transition to electric vehicles.

Source: Habertürk