- VW Group is streamlining its portfolio by 50 percent.
- The number of alternative devices available is decreasing by 75 percent.
- Annual production capacity will drop to nine million units.
We’ve known that things were bad at Volkswagen Group for some time, but the severity of the situation is shocking. In a worrying press release issued just minutes ago, the German automotive group revealed a sweeping plan to drastically cut down on size, not over a few years, but “with immediate effect.” It intends to reduce the model lineup across all its brands by 50 percent. Yes, the portfolio could be halved, leaving only models competing in the “most attractive market segments”.
Not only this. The number of options available for the remaining models will be reduced by up to 75 percent. The VW Group has done an excellent job of allowing customers to configure their cars down to the smallest detail, not only on its luxury models but also on its mainstream cars. Sadly, those days seem to be coming to an end as the cost-cutting agenda demands a dramatically simplified list of options.
In the future, Juggernaut wants to “prioritize products and technologies that provide the greatest added value for customers and the highest value contribution to the group.” In other words, it will focus on the most popular models and those that generate the highest profit margins. The “with immediate effect” part of the statement we mentioned earlier means that the company has already decided which models and options will stay and which will go.
Photo by: Volkswagen
Many models have already been discontinued
For now, all we know is that the Touareg and Touran minivans are already gone, the T-Roc Convertible will follow them to the car graveyard in 2027. Elsewhere, after discontinuing the TT, R8 and Q8 e-tron over the past few years, Audi recently said goodbye to the A1 supermini and Q2 subcompact crossovers. Porsche retired the 718 Boxster and Cayman last October and will stop production of the original Macan at the end of this month.
VW Group is also reducing its annual production capacity to just nine million units. That’s a far cry from the pre-coronavirus era, when the company invested to expand its total capacity to about 12 million vehicles. Since the COVID-19 pandemic, it has already cut capacity by two million units and is now looking to eliminate another million.
Despite further reduction in annual production capacity, the company is not commenting on reports of possible closure of four plants. At the end of June, the German business publication manager magazine wrote that the VW Group may close the Zwickau, Emden, Hanover and Neckarsulm sites. Additionally, the report alleges that the company is considering doubling the number of layoffs to 100,000. However, VW Group is not saying a word about any plant closings or additional layoffs beyond the already announced 50,000 job cuts.
7
Source: Volkswagen
Motor1’s Opinion: Despite all the reports raising red flags about the dire situation at VW Group, today’s announcement makes a lot of sense. Eliminating a lineup to this extent is practically unheard of in the automotive industry. Again, the product portfolio is huge, including models from Volkswagen core brands, Audi, Seat, Cupra, Skoda, Porsche, Bentley and a plethora of Lamborghinis. Bugatti is no longer part of the picture after Porsche sold its stake in the Bugatti Rimac.
Insiders claim that advisers are recommending that Ducati should be put up for sale, while Lamborghini should be publicly traded, but VW Group is remaining tight-lipped. However, a recent statement from the company hasn’t explicitly ruled out any moves, and in light of today’s announcement, it seems like almost anything is possible.
