The Volkswagen brand has struggled in the US market for decades, often troubled with vehicles priced too high or products that arrived too late in segments that were already crowded, such as three-row SUVs. Generations of US shoppers loved the original Beetle, the counter-culture Microbus, and the pioneering Golf GTI hot hatch, but rekindling that spirit in the US market has been extremely difficult. If business was lagging in the US, Wolfsburg could count on high volume in Europe, South America, and, in later years, China to make up the difference.
A white VW Golf moves down the assemly line in Wolfsburg.Volkswagen
But now Volkswagen Group, which owns the VW brand and seven others, is in crisis mode, having lost about a third of its sales volume in China since 2019 while Chinese automakers are eating into VW’s share in its home European market. Restructuring is under way with planned job cuts and plant closures in an attempt to restore profitability.
All of this brings a reminder of the dark days in 2009, when General Motors and Chrysler filed for bankruptcy at the height of a global financial meltdown. But could this crisis actually lead to Volkswagen the car company leaving Volkswagen the sprawling conglomerate?
Like GM Spinning Off Chevy
On Thursday, we can expect more details on VW Group’s cost-cutting when CEO Oliver Blume presents his plans to the supervisory board. Manager Magazin in Germany has reported that the struggling VW brand and parts-manufacturing plants could be spun off as separate entities. That would be like General Motors spinning off Chevrolet in the US, leaving consumers and car dealers with more questions than answers.
1970 Oldsmobile 442 W30 Convertible – Mecum AuctionMecum
What would it mean if the VW brand was spun off? Conrad Layson, senior analyst for alternative propulsion at AutoForecast Solutions, sees a parallel between VW’s current troubles and GM’s closure of Oldsmobile in 2004 and then (five years later due to bankruptcy) Saturn, Hummer, Pontiac, and Saab.
VW Spin-Off Would Hurt Other Brands
“Oldsmobile was responsible for 80% of the engineering that went across all GM brands, and they still killed the brand,” Layson told CarBuzz. In a business sense, a spin-off “will remove resources from the ancillary brands like Cupra, SEAT in Spain, and Porsche and Audi will have to stand alone… or will stand together,” he said.
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VW Group is facing a perfect storm that has been treacherous to navigate. Beyond plant closures, the core VW brand could be spun off, reports say.
If the VW brand is spun off, dealers and parts suppliers would be impacted immediately, but it would take a few model years before car shoppers noticed. “They would do everything they can to buffer the consumer,” Layson said. The biggest problem that would need more time to be addressed, as Layson sees it, is the VW brand product lineup. That’s because the vehicles, in most cases, are in the middle of their life cycles, except for the all-new Atlas launching this year in the US.
“Volkswagen would still be stuck with some models that aren’t particularly successful in various markets.”
–Conrad Layson, AutoForecast Solutions senior analyst
2026 Volkswagen Tiguan Turbo from the front three-quarter angleVolkswagen
While he sees the new Atlas potentially helping the VW brand in the US, “it doesn’t help the Taos or the Tiguan, which are the other two small and midsize SUVs in the lineup, and those need updating… There are no financial resources to make the changes necessary to make those vehicles more attractive in the North American market.”
A spun-off VW brand would likely mean price increases in the US, perhaps resurrecting a problem that has nagged the brand for many years. “This is a crisis in Germany that does have global implications,” said Layson.
How Volkswagen Group management proceeds will affect all the brands, including Bentley and Lamborghini at the top end. Eventually, astute car shoppers “will notice a difference between the componentry in a Volkswagen versus the componentry in an Audi, which traditionally is the next step up in the Volkswagen hierarchy in North America,” Layson explained. “The two brands will drift apart in direction and in focus and in ride and drive feel and quality. All of that will become apparent downstream from the decisions they’re making on July 9.”
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CarBuzz Insight – Why This Matters:
Financial difficulties have forced many an automotive executive to make gut-wrenching decisions about the future of brands, plants, and jobs. If spinning off the Volkswagen brand from VW Group breathes new life into both entities, that’s great. A win-win. But if the VW car brand has already found itself as the weak link in the global conglomerate of its own namesake, then how can it survive on its own without the largesse of Wolfsburg to keep it afloat?
