Volkswagen Will ‘Fundamentally Transform Its Business Model’

The Volkswagen Group is in the midst of a large-scale restructuring plan that will wipe out tens of thousands of jobs in Germany by the end of the decade. In a recent letter to shareholders, CEO Oliver Blume revealed that around 50,000 jobs will be cut within the next four years across the Group in its home market.

Aside from axing jobs, it’s also scaling down global annual vehicle production to nine million to avoid overcapacity. Before the coronavirus pandemic wreaked havoc across the automotive industry, the VW Group consistently built over 10 million vehicles per year, even surpassing 11 million in 2018. Last year, that number fell to just 8.9 million vehicles.

Sales so far this year haven’t been great, as every passenger car brand has suffered a decline except for Skoda. The VW core brand dropped by 7.6 percent in the first quarter of 2026 to 1,048,300 units. Demand for SEAT/Cupra was down one percent to 145,300 vehicles, while Audi suffered a 6.1-percent drop to 360,100 cars. Porsche took the biggest hit, falling 14.7 percent to 61,000 units.

Even the more exotic Bentley and Lamborghini brands had a difficult Q1. The former saw deliveries drop by 9.9 percent to 2,200 units, while the latter declined by 11.7 percent to 2,600 cars. The only bright spot in the VW Group was Skoda, which rose by 14 percent to 271,900 units.

VW Will Take Even More Cost-Cutting Measures

But Skoda’s continued ascent isn’t enough to offset the global problems its parent company is facing. VW Group CFO & COO Arno Antlitz points out that the rise of Chinese brands in Europe is putting “competitive pressure.” To make matters worse, tariffs in the United States have taken a toll on the company’s financial health. The solution? Even more cuts.

‘We must fundamentally transform our business model and achieve structural, sustainable improvements. This includes improving the cost structure of our vehicles without compromising product substance, significantly reducing overhead costs, increasing the efficiency of our plants, and accelerating technology development and decision-making.’

In short, VW wants to reduce costs without hurting quality while speeding up development to bring fresh products to market more quickly. That’s easier said than done with so many brands under the same corporate umbrella. In the coming months, the company aims to reduce complexity in its “product portfolio and technology platforms.” In other words, some models and variants may get the axe, while the number of architectures could decrease.

Arno Antlitz is not the first VW Group executive to warn about the business model. In July 2025, when he was still Porsche CEO, Oliver Blume told employees in an internal letter seen by Bloomberg that the “business model, which has served us well for many decades, no longer works in its current form.” Blume has since stepped down as Porsche CEO while retaining the same position at the helm of the VW Group.

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Source: Volkswagen

Motor1’s Take: With the VW Group’s dominant years now in the rearview mirror, the company faces unprecedented competitive pressure. Additional headwinds include high labor and energy costs, not to mention the European Union accelerating the demise of combustion-engine cars.

While Skoda appears to be bucking the trend compared to other VW Group brands, it isn’t trouble-free either. It’s about to exit China after sales collapsed in a market that, just a few years ago, was the company’s largest. It goes to show how much things can change in such a short timeframe.