The Volkswagen Group has been fairly transparent about the extreme challenges facing the automaker and its eight automotive brands, particularly in China and North America, compounded by tariff wars with the US and instability in the supply chain and with high fuel prices resulting from war with Iran.
A silver Volkswagen Golf moves through the Wolfsburg assembly line.Volkswagen
In recapping how the conglomerate financially weathered the first half of 2026, company executives today lifted the veil to share more details about sales trends, the product strategy, and plans to eliminate at least 100,000 jobs and close plants in Germany by 2030. The company also showed some encouraging signs about first-half sales in the US.
We’ve already reported how Volkswagen was initially growing capacity in recent years to build 12 million cars globally per year and how the latest plan is to realign manufacturing capacity to nine million vehicles. During today’s conference call today with analysts and media, CEO Oliver Blume revealed some good news about North America, while saying the company has “already made significant progress with the reduction of two million units” globally. But the company still has very far to go.
Cutting 500,000 More Units In China, Europe
Volkswagen Group chief Oliver Blume is renwoned for having great relationships with the blue-collar workers and well-heeled investors.Volkswagen
Blume revealed today that the company is discussing further capacity reductions of 500,000 units in China and another 500,000 units in Europe.
“Our target is to lower the breakeven point to production levels of less than 8 million units.”
–VW Group CEO Oliver Blume
Blume also shed more light on the company’s efforts to streamline the model lineup and reduce costs by reducing optional equipment on vehicles to simplify manufacturing complexity. The company recently announced its plan to cut the lineup by up to 50%, although how that plays out for each of the group’s eight vehicle brands remains unclear.
Blume said today this approach allows VW to focus resources on “even higher level innovation, equipment, and the quality of our cars, to reduce segment overlaps and substitutions,” while ultimately increasing sales volume and profit per model. “Every remaining model shall lead its segment in driving and technology experience,” he promised.
VW Group financial results for Q2 and first half 2026Volkswagen Group
Reducing Part Complexity Up To 90%
Meanwhile, Blume said the push to reduce the number of available equipment options by up to 75% is under way and will not compromise product substance. Referring specifically to seats and windshields, for instance, Blume explained the company will reduce component complexity by up to 90%, but said customers will continue to have meaningful choice when shopping for new vehicles. “We are cutting what is not ordered and we scale what customers demand,” said Blume.
Some Good News That Still Isn’t Good Enough
In overall vehicle sales globally through June, VW Group reported 4.0 million deliveries, down 8.4% from first-half 2025. Most of the decline was attributed to China, which not long ago was the automaker’s No.1 region but has since dropped behind Europe.
VW Group financial results for Q2 and first half 2026Volkswagen Group
Through the first half, VW Group sales in China plummeted another 31.6%, while growth was charted in every other region: South America (+5.2%), Western Europe (+1.3%), Central and Eastern Europe (+9.6%), and North America (+0.9%). In the second quarter, North America did even better, showing sales growth of 7.7%, compared to second-quarter 2025.
Upscale Brands Not Doing So Well
As for brand performance, the Progressive group (including Audi, Lamborghini, and Bentley) sold 528,000 vehicles worldwide in the first half, down 8% from first-half 2025 due to headwinds in China and the US, but still achieving a 3.8% operating profit margin. Blume said the group should benefit from the launch of the new Audi Q7, Q9, and RS5 models. Porsche, the only brand in the Sport Luxury group, sold 121,000 vehicles worldwide in the first half, down 11% from like-2025 but still recording an 8% operating profit margin.
2020 Porsche Macan Turbo Front 3/4 ViewPorsche
As for the high-volume mainstream Core brand group, Škoda in the Czech Republic led the way with 8.5% sales growth in the first half, with the Volkswagen brand up 2.4%. The entire Core brand group sold 2.9 million vehicles in the first half, up 3% from like-2025.
Blume said the VW Group restructuring plan is bearing fruit and is not just about cost reduction. “It is a comprehensive plan with a holistic approach to make VW faster, more resilient, more competitive and even more innovative,” he said. “We have got our foot on the gas pedal. We are aligning our products, technologies, and structures to succeed in the new market realities.”
CarBuzz Insight – Why This Matters:
Volkswagen Group has embarked on a long journey to recast a legacy company where change does not come easily. Information will continue coming from Wolfsburg as the work proceeds, and the next installment will be July 29, when Porsche reports its first-half results. When Porsche’s in trouble, it’s a bad sign for the entire group.
But for the moment, the Core brand group is the shining star for the VW collective. Unlike the upscale brands, the Core group grew both sales and revenues (up 1% to $83 billion) in the first half. Wouldn’t it be ironic if the automaker that owns Bentley, Lambo, Porsche, and Audi was saved by mainstream brands? All hail the people’s car.
