Volkswagen cuts models amid plunging China sales and restructuring pressure

Volkswagen will cut its model lineup by up to half and trim production capacity after deliveries in China fell 36.6 percent from April to June. The German automaker said on July 9 that it would reduce annual output capacity to 9 million vehicles from 10 million and cut offering complexity by as much as 75 percent.

Volkswagen Group sales fell 8.6 percent overall in the second quarter and 6.3 percent for the year. Deliveries in China dropped 25.9 percent in the first half and 36.6 percent in the second quarter, even as sales outside China rose about 2 percent. The group delivered 4.12 million vehicles globally in the first six months of 2026, down from 4.41 million a year earlier.

Volkswagen has been trying to reset its China business around the “in China, for China” strategy it presented at a China Investor Update in Beijing on April 23. Oliver Blume and Ralf Brandstätter used that event to press local product development, technology capabilities and competitiveness in China’s fast-moving new-energy vehicle market, where domestic rivals have moved faster on software and electric platforms. China market demand fell about 20 percent in the first half, while Volkswagen’s own deliveries there fell 26 percent.

Global battery-electric vehicle deliveries reached 437,171 units in the first half, down 6 percent from a year earlier, while U.S. BEV deliveries sank 69 percent after government subsidies expired and tariffs added pressure. In Europe, the company said its all-electric order book rose by more than 50 percent from the end of 2025, and more than 54,000 orders had already been placed for entry-level Electric Urban Car Family models from VW, Škoda and CUPRA, even though only three of the four models were then on sale.

Volkswagen’s executive board presented a package of 12 initiatives and a 2030 target picture to the supervisory board, and it separately entered an exclusive arrangement with Bain Capital to sell a 51 percent stake in Everllence, a deal expected to bring in about 7.4 billion euros. The overhaul could affect about 100,000 jobs and involve plant closures in Hanover, Emden, Zwickau and Audi’s Neckarsulm site, while employees and IG Metall members protested in Wolfsburg. Blume summed up the mood at the board meeting: “The global situation has continued to deteriorate over the past twelve months. That is why we are acting now.”