Volkswagen to scrap half of product lineup as China, EV pressures mount

Volkswagen Group ( VWAGY ) is preparing to cut half its global product lineup as it fights a crumbling position in China, rising costs, and lagging EV sales.

VW, behind brands like its namesake passenger cars and Audi, Skoda, Bentley, and even Lamborghini, delivered 2.08 million vehicles worldwide in Q2, down 8.6% from a year ago. In China, deliveries plunged 36.6%, to 424,300, as the local market contracted and Chinese rivals kept gaining ground. The rest of Asia-Pacific fell 7.2%. Volkswagen Passenger Cars bore the brunt, shedding 14% globally in the quarter.

Electric vehicles, once billed as Volkswagen's growth engine, tumbled alongside the broader business. Global all-electric deliveries slid 4.2% in the quarter, to 238,400 vehicles. The steepest drop came in the United States, where EV deliveries tumbled 49% to 5,800 units after federal subsidies expired and new tariffs took hold.

China EV deliveries fell 35.6%, and the core Volkswagen Passenger Cars brand saw its EV volumes drop 22.2%. Local competition that better caters to Chinese buyers, and advantage of government subsidies hurt VW badly in the region.

CEO Oliver Blume, facing criticism himself, had to make some changes.

Hence VW's so-called Future Plan , a package of 12 initiatives tied to a "2030 target picture," in which, among other things, VW's model lineup will be gradually streamlined by up to 50%, concentrated on the most attractive market segments, with product complexity — trim levels, certain options packages — slashed by up to 75%.

"We can only achieve this by substantially reducing complexity," Blume said in a statement, "in our product portfolio and technology platforms, in the number of units and decision-making levels."

For VW fans in the US this could mean the exit of enthusiast-focused, but low volume cars like the Golf R hatchback, Jetta GLI sedan, or Audi e-tron GT EV.

Production capacity is being pulled back globally as well, and that means layoffs. VW says capacity will come down to 9 million vehicles a year from 10 million, which once stood at 12 million before the pandemic.

Per Automotive News , Blume considered closing four plants in Germany, and cutting up to 100,000 jobs, but labor representatives on the company's board blocked the move.

Other avenues for shoring VW's cash position could come by divesting some of its luxury brands. Lamborghini has been long rumored as a spin out candidate, as well as Italian motorcycle maker Ducati. A move like this would follow the successful IPO of Porsche ( P911.DE ), though the German automakers's shares have suffered in the past year as it faces similar issues like VW.

There were bright spots, however. South America grew 9.4%, Western Europe added 1.8%, and Central and Eastern Europe rose 6.7% last quarter. Europe's all-electric order book grew more than 50% versus the end of 2025, helped by the entry-level VW ID. Polo, Škoda Epiq, and CUPRA Raval, which in total have over 54,000 orders.

Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram .

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