Volkswagen Group has launched an aggressive cost-cutting push that reaches into the very top of its management ranks and across its global production footprint. The automaker announced a plan to reduce the number of board members in its “core brand cluster” — the team that manages Volkswagen Passenger Cars, Škoda, SEAT/CUPRA and Volkswagen Commercial Vehicles — from 29 to 19 by the summer of 2026, a one‑third reduction intended to lower overhead and speed decisions.
The management pruning is just one element of a broader reorganisation that will fold more than 20 factories into five production regions. Cross‑brand and cross‑country management responsibilities will shift to regional managers, part of an effort to simplify governance and cut duplication. Volkswagen projects that the production‑side restructuring alone will save about €1 billion by 2030, of which roughly €600 million will come from labour‑cost optimisation and €400 million from efficiency gains.
The urgency behind the measures is financial and geographic: Volkswagen remains the world’s second‑largest automaker by volume, but its results have been under pressure. In 2025 the group’s global deliveries fell to 8.984 million vehicles, down 43,000 units or 0.5% year‑on‑year. The weakness is concentrated in China, the group’s largest single market, where deliveries slipped to 2.694 million vehicles, a decline of 234,000 units or 8% versus 2024. Sales of pure battery electric vehicles in China plunged 44.3%.
Volkswagen’s retreat in China is stark when measured against its recent peak: in 2019 the group sold about 4.23 million vehicles in China, close to 40% of its global sales. The rapid rise of domestic Chinese EV makers and the intensifying competition in the Chinese market have left Volkswagen’s local performance well below its former strength and weighing on group profitability.
North America has added to the headwinds. Regional deliveries fell 10.4% to about 946,800 units in 2025, with U.S. volumes down 13.6%. Volkswagen executives have flagged trade tension and tariffs as a material drag — the company estimated tariff costs of roughly €2.1 billion in the first nine months of 2025 — and has effectively paused plans for a new Audi factory in the United States.
The financial strain is visible in the group’s earnings. Volkswagen reported a third‑quarter net loss of €1.07 billion, a swing from a €1.56 billion profit in the same quarter a year earlier, and its nine‑month net profit of €3.4 billion was down 61.5% year‑on‑year. Part of the fall reflects disruption from Porsche’s strategic reorganisation inside the group, but the broader picture is one of margin compression and urgent cost discipline.
The current measures build on earlier decisions: in 2024 Volkswagen announced plans to cut 35,000 jobs in Germany by 2030 and closed its Dresden plant in December, the first German factory shutdown in the group’s near‑90‑year history. The company is shifting more manufacturing capacity overseas to lower cost bases while confronting the painful consequences of a market transition toward electrification that has not unfolded in Volkswagen’s favour in China.
That contrast with Toyota is instructive. Toyota’s 2025 sales rose about 6% to 10.42 million vehicles as the Japanese group leaned on stronger demand in North America and Japan and a still‑significant internal combustion engine (ICE) vehicle franchise. Volkswagen’s larger exposure to China and its EV strategy there mean that local market volatility now has outsized consequences for the global group.
For Volkswagen, cost cutting is not merely a margin exercise; it is survival management while the auto industry undergoes an epochal energy and technology shift. The group’s decisions to slim management, consolidate factories and move capacity overseas will reshape employment, supplier relationships and competitive dynamics in Europe and China. The company’s longer‑term performance will hinge on whether cost discipline can buy time for its electrification plans to pay off.