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

Volkswagen Group (VWAGY) is preparing to chopped fractional its planetary merchandise lineup arsenic it fights a crumbling presumption successful China, rising costs, and lagging EV sales.

VW, down brands similar its namesake rider cars and Audi, Skoda, Bentley, and adjacent Lamborghini, delivered 2.08 cardinal vehicles worldwide successful Q2, down 8.6% from a twelvemonth ago. In China, deliveries plunged 36.6%, to 424,300, arsenic the section marketplace contracted and Chinese rivals kept gaining ground. The remainder of Asia-Pacific fell 7.2%. Volkswagen Passenger Cars bore the brunt, shedding 14% globally successful the quarter.

Electric vehicles, erstwhile billed arsenic Volkswagen's maturation engine, tumbled alongside the broader business. Global all-electric deliveries slid 4.2% successful the quarter, to 238,400 vehicles. The steepest driblet came successful the United States, wherever EV deliveries tumbled 49% to 5,800 units aft national subsidies expired and caller tariffs took hold. 

China EV deliveries fell 35.6%, and the halfway Volkswagen Passenger Cars marque saw its EV volumes driblet 22.2%. Local contention that amended caters to Chinese buyers, and vantage of authorities subsidies wounded VW severely successful the region.

CEO Oliver Blume, facing disapproval himself, had to marque immoderate changes.

Hence VW's alleged Future Plan, a bundle of 12 initiatives tied to a "2030 people picture," successful which, among different things, VW's exemplary lineup volition beryllium gradually streamlined by up to 50%, concentrated connected the astir charismatic marketplace segments, with merchandise complexity — trim levels, definite options packages — slashed by up to 75%. 

"We tin lone execute this by substantially reducing complexity," Blume said successful a statement, "in our merchandise portfolio and exertion platforms, successful the fig of units and decision-making levels."

For VW fans successful the US this could mean the exit of enthusiast-focused, but debased measurement cars similar the Golf R hatchback, Jetta GLI sedan, oregon Audi e-tron GT EV.

Production capableness is being pulled backmost globally arsenic well, and that means layoffs. VW says capableness volition travel down to 9 cardinal vehicles a twelvemonth from 10 million, which erstwhile stood astatine 12 cardinal earlier the pandemic.

Per Automotive News, Blume considered closing 4 plants successful Germany, and cutting up to 100,000 jobs, but labour representatives connected the company's committee blocked the move.

Other avenues for shoring VW's currency presumption could travel by divesting immoderate of its luxury brands. Lamborghini has been agelong rumored arsenic a rotation retired candidate, arsenic good arsenic Italian motorcycle shaper Ducati. A determination similar this would travel the palmy IPO of Porsche (P911.DE), though the German automakers's shares person suffered successful the past twelvemonth arsenic it faces akin issues similar VW.