Its cars aren’t profitable enough

Ford CEO Jim Farley once said that core models such as the Fiesta, Focus, and Mondeo/Fusion were not phased out because they were selling poorly. Instead, these cars were retired because the Blue Oval was not making enough money from them. High production costs ate up profit margins, making them unprofitable and ultimately forcing Ford to pull the plug on three of its longest-running nameplates.

Fast forward to 2026, Volkswagen Group is facing a similar problem across its vast portfolio of brands and models. In an interview with a German newspaper imageCEO Oliver Bloom explained that the problem stemmed not from a lack of demand but from a profitability issue: “Our products are very popular – but we are not making enough money on them. So we need to further reduce our costs across all cost categories.”

But not every product in the giant VW Group is equally popular. The automotive group has already announced a drastic cost-cutting plan that could effectively halve its product portfolio. Up to 50 percent of models sold by the VW core brands, Audi, Skoda, Lamborghini, Porsche, Bentley, SEAT and Cupra, could be phased out in the coming years. The company seeks to reduce complexity by prioritizing products with the highest volume and largest profit margins.

talking with imageBlume reiterated that he wants to downsize the VW Group to turn things around: “In the future, we want to increase sales per model. To achieve this, we are constantly streamlining our product portfolio.” Apart from removing a lot of models from its vast lineup, the company will also reduce the number of options available for the remaining models by 75 percent.

Interestingly, there was no mention of the plant closure in the press release issued by the company last week or in Bloom’s interview with the German newspaper. This is despite the group having already announced plans to reduce annual production capacity to 9 million vehicles, or 1 million less than today. German business publications manager magazine There are allegations that the Zwickau, Emden, Hanover and Neckarsulm factories are at risk of closure, but VW Group has not confirmed the report.

image claims the layoffs could exceed the previously announced 50,000 job cuts. VW Group could cut its workforce by more than 120,000 employees, about a fifth of its global workforce. However, this figure remains a rumor at the moment. Still, the automotive giant is looking to reduce operations to offset higher labor and energy costs by focusing on its cash.

Of the eight car brands under the VW Group corporate umbrella, only Skoda has issued a separate statement following the parent company’s cost-cutting announcement. A spokesperson for the Czech automaker said reuters “There is no immediate impact on our operations” and the company’s factories are running at full capacity.

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Source: Volkswagen

Motor1’s Opinion: There’s a storm brewing in Wolfsburg, and it’s clear that the old business model is no longer working. High production costs, excessive model complexity and unprecedented competition have contributed to the struggles of an automotive giant. VW Group has the strength to make a comeback, but not before radically shrinking its business.

The Volkswagen Group of tomorrow will look very different from today, and an already dire situation is likely to get worse before it gets better.