Volkswagen cuts lineup after weak sales and China slump

Volkswagen Group delivered 2.077 million vehicles in the second quarter of 2026, an 8.6% drop that laid bare how sharply the company’s China exposure and lineup sprawl are colliding with a slower, more competitive market. The steepest decline came in China, where deliveries fell 36.6%, while North America rose 7.7% and Western Europe edged up 1.8%, showing that the downturn was concentrated rather than universal.

The company moved quickly to answer that pressure. On July 9, Volkswagen’s executive board presented its Future Plan as part of a strategic realignment aimed at making the group faster and more competitive by simplifying operations, tightening technology choices, improving coordination across regions and reducing excess capacity. Volkswagen said the overhaul came as it faced geopolitical tensions, higher costs, tariffs, stricter regulation and intense competition, especially in China, where local electric-vehicle makers continue to gain share.

China remains the central problem. Marco Schubert, a member of Volkswagen’s extended executive committee for sales, said the group could not escape a total market decline of around 20% there. Volkswagen had been betting heavily on the Chinese market as recently as December, making the reversal especially sharp. The company’s own delivery figures show how uneven the portfolio has become: the core Volkswagen brand delivered just over 1 million vehicles in the quarter, down 14% from a year earlier, Audi fell 8% and Porsche dropped 18%, while Lamborghini, Škoda and the trucks unit posted gains.

Volkswagen’s first-half 2026 numbers offered a narrower sign of resilience. The group delivered 4.1 million vehicles in the first six months, and sales outside China grew by around 2%. The order book for all-electric vehicles in Europe rose by more than 50%, suggesting that parts of the transition to electric cars are still gaining momentum even as the group’s China business weakens.

The restructuring is already spilling into labor conflict in Germany. IG Metall organized protests at around 20 Volkswagen sites ahead of the supervisory board meeting, including action outside the plant in Zwickau, where employees demanded job protections and opposed closure plans. Works council chief Daniela Cavallo and union leader Christiane Benner warned they would resist the cuts, turning Volkswagen’s product shake-up into a wider fight over the future of its factories, brands and industrial footprint.