Germany's Volkswagen plans to reduce the group's global production capacity by 10% to 9 million vehicles. It is also considering cooperating with Chinese car companies to produce partners' cars in factories with low operating rates and selling factories.The Volkswagen Group's global new car sales in 2025 will be 8.98 million units (including Audi, Porsche and other brands), while the current production capacity is about 10 million units, with excess production capacity reaching 1 million units.
Volkswagen CEO Oliver Blum said, "In an environment with no hope of growth, production capacity needs to be readjusted to 9 million vehicles to match customer demand."
In fact, Volkswagen's previous global planned production capacity was as high as 12 million vehicles, and this adjustment means that a total of 3 million vehicles will be cut off.
Volkswagen faces dual pressures: U.S. tariff policies have led to a decline in sales in the North American market, and the Chinese market continues to lose ground due to intensifying competition from local brands.
Volkswagen will deliver approximately 2.69 million vehicles in China in 2025, down 8% year-on-year, and China's market share continues to shrink.
German domestic factories have become the focus of restructuring. Factories such as Emden and Zwickau, which have low operating rates and high labor costs, have been targeted for restructuring.
It was previously reported that Xpeng Group was negotiating with Volkswagen to acquire the factory.
Volkswagen will invest approximately US$700 million in Xpeng in 2023 to acquire a 4.99% stake and jointly develop two B-class pure electric models, which are planned to be launched in the Chinese market under the Volkswagen brand in 2026.
Xpeng currently entrusts Austrian Magna with OEM production and has a strong intention to expand its business in Europe.
In addition, the Osnabrück factory, which will cease production in 2027, has plans to cooperate with Israeli companies to produce defense equipment parts.
Volkswagen stated in March that the entire group would lay off 50,000 people in Germany by 2030. After the restructuring, the operating profit margin is expected to rise to 4% to 5.5% in fiscal year 2026 from 2.8% in fiscal 2025, and the long-term goal is to reach 8% to 10% in 2030.
