The Margin Problem
Think Ford gave up on the Fiesta because nobody wanted to buy it? No. They dropped the Focus, the Fusion, the Mondeo because the math sucked. You build the car. You sell it. But the cost to make it eats all the profit. The car itself? It loses money.
Volkswagen Group is looking at the exact same mirror image today. 2025 or 2026 or whenever we call the present moment the situation is identical. Oliver Blume the CEO spoke to the German paper Bild and he didn’t mince words.
The products are popular. People buy them.
The problem? We aren’t making any money.
That’s why we have to slash costs everywhere. Not just one department. All categories.
This isn’t about demand dropping off a cliff. It’s about the price tag on the car not covering the reality of building it.
Killing The Lineup
Here is the blunt truth. Half the models in the Volkswagen portfolio are gone.
We are talking about fifty percent of the range for the core VW brand and the stable of satellites. Audi. Skoda. Lamborghini. Porsche. Bentley. SEAT. Cupra. All of them. The plan is to strip the portfolio down to its ribs. Keep the volume sellers. Keep the ones that actually pay the bills. Drop the rest.
A preliminary list—leaked unconfirmed but credible—shows ten models facing the axe. The Jetta? Dead. The Taycan? Also likely.
Why keep the complexity if the profit margin is a joke?
“We want to increase sales per model.”
To do that Blume says we are cutting options. Not a few trims. Seventy-five percent of the configurator checkboxes will disappear. Buy a car. One color. One wheel choice. No more endless variations.
And no plant closures have been confirmed. Not yet. The press release was silent on shuttering factories. Manager Magazin is whispering about Zwickau Emden Hanover and Neckarsulm being on the chopping block but Wolfsburg isn’t admitting anything. Production capacity drops from 10 million to 9 million vehicles though. One million less cars built per year.
The Human Cost
This is where it gets ugly.
Fifty thousand job cuts were already announced. Bild says that number could triple. Up to 120,0 That would be a fifth of the entire global workforce gone. Just… gone.
Is it official? No. It’s a rumor. A heavy one but a rumor nonetheless.
The company wants to offset the insane costs of energy and labor in Germany by focusing strictly on cash cows. Scale down. Trim fat. If the rumor holds water we are looking at a massive downsizing.
Skoda was the only brand brave enough to comment separately. They told Reuters they are fine. No impact on operations. Factories running at full tilt. For now.
A New Shape
Look at the 2025 VW ID. Polo GTi. Cute. Agile. But is it profitable to build in Europe at these energy prices? Maybe. Maybe not.
Motor1 sees a storm forming over Wolfsburg. The old playbook is ash. You can’t have high costs and high complexity and low prices anymore. The market won’t pay it. The competitors won’t let it happen.
Volkswagen is strong. They will survive this. But they won’t survive as they are today. They have to shrink to stay relevant. The transition will be brutal. It will likely get worse before the dust settles. The VW of tomorrow is leaner colder and completely different.
