Volkswagen to slash half its vehicle lineup and 50,000 jobs in cost-cutting effort
(CNN) — Volkswagen Group announced late Thursday that it plans to eliminate 50,000 jobs and cut half of its vehicle offerings. The German automaker is struggling with headwinds from increasing Chinese competition in Europe and tariff costs on its shipments to the US market.
Volkswagen Group said it has also determined that its German factories have excess capacity of about 500,000 vehicles a year but did not identify specific job cuts or factory closings.
It sells Audi, Porsche and Lamborghini brands, in addition to Volkswagen and other offerings.
The automaker has been cutting staff and battling its powerful German unions for years. Its employment in Germany dropped from 275,000 in 2023 to 254,000 as of June 30, 2026, according to the company’s most recent financial report.
Volkwagen buyers, in addition to having fewer models to choose from, will also have far less ability to buy cars with the specific features they want. The company said it will cut “complexity” of the cars they build by 75%.
“The prioritized models aim to excel in design and technology – and benefit from the focus on fewer variants,” according to a statement from Volkwagen Group on Thursday. The change will result in “higher volumes per model, lower costs, stronger economies of scale.”
“Given international competition, the challenges facing Volkswagen and the German automotive industry are enormous,” Olaf Lies, the minister-president of Lower Saxony, said in a statement on Thursday. The German state is the second-largest shareholder of Volkswagen AG, Volkswagen Group’s parent company.
“We need a competitive framework and a trade policy that strengthens our industrial base in an increasingly fierce global competition,” Lies added.
Additionally, the company faces significant costs from US tariffs on imports. Tariffs could cost the company about $4.7 billion to $5.8 billion this year, according to a recent investor calls. While it builds 200,000 cars at US plants, it imports about 240,000 cars from Europe annually with a 15% tariff and 287,000 cars from Mexico with a 27.5% tariffs.
Like other automakers, VW had planned to make a major shift to electric vehicles. But with cutbacks in support of EVs by the Trump administration, it halted production of its electric EV for the US market, the ID.4, in April. It also faces challenges for its EV plans in Europe due to the growth of sales electric models from Chinese automakers there.
The-CNN-Wire
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