VW's in big trouble: 75 models set to be slashed, factories will close... and bye bye Seat

The giant Volkswagen Group, the world's biggest carmaker by turnover, has had a brutal reality check. It is embarking on a huge restructuring plan that'll simplify operations and close plants. By 2030 there will be only half the current number of models as now – a global cut across the brands from 150 to 75. Up to four factories have been earmarked for possible closure, including the massive Audi Ingolstadt operation.

What makes this all the more shocking is that they'd already announced a big retrenchment in 2024. That has now been swamped by an incoming tidal wave of problems. Although it's currently profitable at 3.8 per cent margin, CEO Oliver Blume says things are getting worse fast.

"We are in the biggest transformation in the history of the global automotive industry. Everyone is affected: by US tariffs, by the collapse of the Chinese market and massive price erosion there, by geopolitical conflicts such as those in the Persian Gulf, by ever-harder competition in Europe and by sweeping regulation," says Blume.

To slim down the model range, the Group will kill off cars that are lame ducks or that duplicate other cars from related brands. Most striking, the whole Seat brand will go, as it's becoming a distraction to the more successful Cupra and is too similar to VW.

Efficiency will also come from stripping complexity out of the configurators. Trims, engines, transmissions and options will all be pulled back, leaving only the strong sellers. This reduces expensive complexity all down the chain, from development to purchasing to manufacturing to the parts shelves at dealers.

Examples? Across Audi, Bentley and Lamborghini there are currently 2,600 varieties of seat. That'll be cut to about 100. Audi boss Gernot Döllner recently told me he will cut the number of steering wheels from 100 to five. Fewer shapes, fewer button layouts, fewer colours, fewer rim contours. (He told me that anyway buyers can be paralysed by massive choice, or when the exact thing a buyer thinks they want is unavailable, they're unhappy. If they weren't falsely tempted in the first place they actually end up more content.)

Blume stresses the VW Group will still cover a vast range of prices, from bottom-end Skodas to the top reaches of Lamborghini, Porsche and Bentley. It'll also remain global.

Most striking, the whole Seat brand will go

But there will be more sharing of engineering across the brands, including another cut in platforms. Expect yet a further go – there have been several unsuccessful ones – at building a single software stack that's versatile enough for all needs.

China is thorny too. VW used to sell massive numbers there at big profit, but prices have fallen and competition from local brands is taking huge chunks out of the sales volume of VW's brands in China, even the premium ones. So they have to cut cost there, and might export more China-made cars here, as they already do with the Cupra Tavascan.

Factory closures are inevitable. The Group made 11 million cars in 2019. Now it's planning for 9 million, a huge admission its power is waning. That's like removing almost an entire BMW's worth of production. Four are in the firing line: Audi's big Ingolstadt plant, Emden (VW ID.4 and ID.7), Hanover (Multivan, Buzz) and Zwickau (several MEB electric cars).

Blume stresses the plan isn't just about cuts but about efficiency. The complex structures of brand management are supposed to be slashed too. That sort of thing is hard to measure, so will need great discipline.

This whole plan was approved yesterday by the Group's Supervisory Board. This matters because as is usual in German companies that body includes heads of unions and local government. Without this, putting people out of work and closing factories would doubtless mean unrest and strikes. Given they are all aligned, it's plain everyone could see the calamity the Group and its workers would face if they didn't act.