Volkswagen has spent decades building one of the broadest portfolios in the car industry. Now it wants to become more competitive by making that portfolio smaller. The Volkswagen Group’s Future Plan 2030, approved by its supervisory board in September 2026, calls for fewer models, simpler equipment choices, leaner management and a production network more closely matched to demand. At the same time, the company intends to bring affordable electric vehicles to market and invest in better software. Next Phase of Transformation
The ambition is easy to describe and difficult to execute. Volkswagen must cut costs without weakening the products people want to buy. It must adapt to different markets without allowing every region to develop an entirely separate car. And it must persuade workers, customers and investors that a difficult restructuring will leave it stronger.
Why the plan arrived now
The group says trade barriers, geopolitical uncertainty and fierce competition have made its operating model too expensive. China presents a particularly difficult test as domestic manufacturers develop new vehicles quickly and compete on price and technology. In Europe, Volkswagen remains a major seller of both combustion-engine and electric cars, but it faces pressure to offer electric vehicles that more mainstream buyers can afford. Next Phase of Transformation
Its financial results illustrate the challenge. In the first half of 2026, Volkswagen Group reported revenue of €158.1 billion and an operating return on sales of 3.8%. Management said that margin was too low for a company that needs to finance major technology and product investments. The Future Plan targets a 9% operating return on sales in 2030, based on average annual global sales of nine million vehicles. That figure is a target, not a result Volkswagen has already achieved. Volkswagen Group
Fewer models, more attention to each one
One of the plan’s most consequential proposals is to reduce the group’s product portfolio by roughly half by 2035. Volkswagen says it would still offer about 75 models across its brands. The aim is to remove overlapping vehicles and versions that consume engineering and manufacturing resources without attracting enough buyers. It also plans to cut the complexity of equipment options by about 75%, replacing many individual choices with simpler packages. Next Phase of Transformation
The trade-off is clear. Fewer combinations can make a car cheaper to develop and produce, and a simpler ordering process may help customers. But buyers who value a particular niche model or highly specific configuration could lose that option. Volkswagen will have to identify the choices people care about while keeping meaningful differences between its brands.
Affordable electric cars are central to that calculation. The group’s Electric Urban Car Family uses a shared platform for models sold under the Volkswagen, CUPRA and Škoda names. Volkswagen has presented a starting price of around €25,000 for the family. Shared components and higher production volumes could help make that price viable. The ID. Polo and related vehicles also give the company a chance to reach buyers who found earlier electric models too expensive. Actual prices and availability will depend on each model’s market launch. Volkswagen Group
Factories and jobs become the hardest test
Volkswagen’s factories were built for a larger market than the one its new plan assumes. The group says it has already removed annual capacity equivalent to two million vehicles from a network once sized for more than 12 million. It now aims to reduce capacity by a further 500,000 vehicles a year in Europe and another 500,000 in China. It also wants to make its European production network about €1.5 billion more efficient each year. Next Phase of Transformation
Those figures have consequences for employees and communities. Volkswagen says the plan provides for roughly 50,000 additional position reductions across about 170 companies, beyond measures previously agreed. Approximately half would be in Germany and half elsewhere, with details to be worked out alongside employee representatives. The company has also said it cannot guarantee a competitive future use for several European plants under current planning. That signals uncertainty; it is not a completed decision to close those sites. Next Phase of Transformation
For management, reducing unused capacity is a route to healthier margins. For workers and local governments, the pressing question is what jobs, investment or alternative uses will follow. How Volkswagen handles those decisions may matter as much to the plan’s success as its financial targets.
One company, different regional strategies
The Future Plan does not assume that the same vehicle will succeed everywhere. In China, Volkswagen is continuing its “In China, for China” approach, developing products and technology around local expectations. In North America, it is placing more emphasis on SUVs and pickups suited to that market, along with local production. Across the group, it wants simpler technology systems and faster decisions. Next Phase of Transformation
Software is another part of the shift. Drivers increasingly judge a car by its digital interface, assistance features and how reliably those features work over time. Volkswagen has pursued partnerships, including a joint venture with Rivian, to improve its electrical architecture and software. The value of that work will become clear when vehicles using it reach customers and perform reliably in everyday use. Volkswagen Group
Volkswagen’s plan is ultimately a bet that greater focus can produce better cars and stronger finances at the same time. The milestones to watch are concrete: whether affordable electric models attract buyers, whether simpler development speeds up launches, whether factories can adapt, and whether margins improve without damaging quality. Approval of the Future Plan established the direction. The next several years will show whether the group can deliver it.
