These figures are from 2025 and the latest figures this year have seen sales declining by as much as 10% compared to last year. 10% down on these large numbers is a significant decline in revenue.
Mixed bag of sales results for first half of 2026 with China down by 26% being the big change. Electric vehicle sales are also down in a growing market which is what is creating panic.
When the second largest car manufacturer in the world is talking about reducing their work force by 100K world wide then you have to sit up and pay attention. This is big news along with the idea of reducing the VW model range by 50% which with all the variants would account for 75% of the current model offering.
The idea is to close four VW plants in Germany which will account for 50K jobs and the other 50K will come from other plants based abroad. This is the biggest restructuring ever with regard to car manufacturing. The problem is the declining car sales and the company needs to address this head on and manufacture cars people want at a competitive price.
The VW shareholders could be a stumbling block with 20% being held by the State of Lower Saxony which is the labor representatives from the region. The head of the region in Lower Saxony said he would not agree to this deal which is kind of crazy because the company should come first.
Times have definitely changed and even the very big companies are feeling the squeeze and are having to pivot quickly. VW prior to Covid was aiming for 12 million vehicles per year and that number has been revised and adjusted down to 9 million. That is a hefty knock in a very short space of time and who knows is the 9 million a realistic number or should the company rather be looking to hold 6 million.
These times are unprecedented and bad news is hitting VW from all sides. Reduced sales in Europe which is their bread and butter along with a 9% drop in sales from China in April/May plus the US tariffs have battered or should I say rocked the company forcing them into drastic measures.
Obviously the labor representatives/unions will not be happy, but the facts and the bottom line are the reality. When things are this dire you cannot stay on the same path as the trajectory will not change. This is more about securing the company for the future or there is no future without change and why the worker unions cannot say they do not agree because this is far bigger than them.
The biggest problem is the EU not protecting their local manufacturers against cheaper Chinese imports which should have a higher import tariff. The facts are clear with the Chinese government subsidizing car exports to the extent profits are made even when selling at cost with the aim of destroying all competitors globally. This is the same playbook from the 1990's when the Chinese captured the worlds manufacturing industry which governments allowed to happen. When the competitors have been removed prices rise and the replacement has turned full circle. China is no longer the cheapest for manufacturing in the world today and more the fact they have very little competition.
I do think the legacy car manufacturers have been caught out by how aggressive the Chinese auto manufacturers have been. This is not just VW in panic mode as every auto manufacturer is in a similar position. The US auto sector is considered stable in comparison as they have protected their industry from imports which is the correct decision.
Posted Using INLEO
