- Volkswagen plans to reduce production to 9 million units per year.
- The move will impact jobs in Europe.
- The upcoming Scout brand may help VW retain workers and production in the United States.
Last year, Volkswagen announced the first factory closure in its 88-year history, part of a massive cost-cutting and restructuring effort. The German automaker is now eying other measures to improve profitability and lower operating costs, including cutting its international production capacity by another 1 million units.
German trade publication Manager Magazin reported that VW would reduce its global output to 9 million vehicles, a significant drop from its more than 12-million-unit capacity not that long ago. Company CEO Oliver Blume disclosed the move, which is aimed at improving profit margins over chasing volume sales.
Blume said, “In Europe, we will also reduce this figure by around 1 million by 2028, primarily at Volkswagen and Audi. Overcapacity is not sustainable for our company in the long term. And in today’s market and competitive environment, past volume planning is unrealistic.” He also noted that VW Group is “facing negative impacts in the tens of billions,” saying the automaker is taking “massive countermeasures.”
Volkswagen set its 12 million unit goal back in 2019, before COVID-19 and more recent tariff measures. Blume placed particular emphasis on the impacts of tariffs, saying that the U.S.-imposed trade rules “are impacting our earnings and making access to an important future market more difficult.”
In Blume’s eyes, the lower production target would still be an achievement, and it could help protect VW against further instability, including shifting EV sales and additional tariff actions.
Reducing production output could affect as many as 50,000 workers by 2030, but North American factories might be saved by the upcoming Scout brand. Blume said Scout is a great fit for the American market, but he also noted that the new brand’s factory in South Carolina could be shared with other brands, including Audi, to spread the risk of introducing a new nameplate.
