Volkswagen plans to cut model lineup by up to half and shrink production capacity

VW Group's five 'core' brands each sell a Golf - but firm wants to remove complexity Company will remove derivatives and cut equipment options by 75% as it gives each brand a clearer line-up The VW Group will cut up to half the models it sells as part of a strategy to dramatically cut costs and complexity across all of its brands. The firm posted a dramatic drop in profits in the first half of 2026, returning a margin of just 3.8%, which it says highlights the urgent need for a radical restructuring of the entire company. It plans to significantly cut its overheads by trimming up to 100,000 jobs globally, and now bosses say reducing the amount of cross-over and complexity in its vehicle line-up is another fundamental strand of its strategy to grow margins. Company CEO Oliver Blume told journalists that the company is preparing “a major reduction of up to 50% of our product” in a bid to reduce manufacturing and development costs, while clarifying and strengthening the market positioning of its models. “We want to focus our expenditures on clear-focused products - to improve innovations, to improve technologies, to improve equipment, and to improve the quality of the single products - then to achieve higher volumes with more focused products.” “To achieve a higher profit margin per product - that’s the intention.” He added that the company knows it has “substitutions in some segments between the brands”, referring to the significant degree of internal competition between equivalent models from the volume brands Volkswagen, Audi, Skoda, Seat and Cupra. The Volkswagen Golf, for example, provides the basis for four other technically identical C-segment family hatchbacks from each of those sibling brands - with little variation in pricing, performance or equipment. It’s the same story for the Polo supermini, T-Roc crossover and Tiguan SUV - and each of the VW Group’s electric cars has at least one direct equivalent at a sibling brand, like the Porsche Macan Electric and Audi Q6, for example. The impending rationalisation, then, will seek to alleviate some of this intra-brand competition by “cleaning it up and reducing complexity”, Blume said. He said the firm will start by cutting its “high number of derivatives”, referring to individual trim levels and equipment packages, which will account for the bulk of the cuts. Blume added that while the amount of cars left in the resulting line-up “will still be far higher than what we see in the competition,” it will nonetheless amount to a halving of the VW Group’s portfolio. “Every remaining model shall lead its segment in driving and technology experience,” he vowed.  The firm has evaluated its parts and supply chains and determined that it could “reduce the number of available equipment options by up to 75% without compromising product substance”, Blume explained, adding that increased sharing of parts like seats and wind screens will cut component complexity by up to 90%. “The customer will continue to have a meaningful choice,” he pledged. “We are cutting what is not ordered, and will scale what the customer demands.”  When it comes to axing entire model lines, he said that will be a “longer programme because we have our current portfolio currently in production and in the market”; taking a car off sale before its scheduled retirement – and without a replacement – is an expensive process and leaves production lines out of action.  “Step by step, we will clean it up and reduce complexity,” he said, without acknowledging recent reports that models including the Porsche Tacan, Skoda Fabia and US-market Volkswagen Jetta could be among those headed for retirement.

RIP Volkswagen? The downfall of a German giant  The TelegraphThe Guardian view on Volkswagen’s crisis: another wake-up call for Germany and the EU | Editorial  The GuardianVolkswagen planning to cut up to 100,000 jobs globally  BBCVW workers to grill CEO on overhaul threatening 140,000 jobs, works council says  ReutersThe Volkswagen Group is planning to halve the number of models it makes  Top Gear

With the conglomerate planning to axe up to half of its global lineup, a German newspaper claims to know the hit list.

Faced with an aggressive margin squeeze, a brutal market share collapse in China, and crippling domestic overhead, Volkswagen is preparing for a radical, historical contraction.

Europe's largest automaker is under unprecedented pressure to restructure ‌the business as it grapples with high costs, excess production capacity and declining sales in major markets.