Are sports like polo and golf now in danger?

Volkswagen announced tough austerity measures and no longer ruled out job cuts and plant closures. What does this mean for the product range.

Christopher Clausen/t-online

Volkswagen is drastically tightening austerity measures: The brand wants to close at least three factories in Germany and cut tens of thousands of jobs. This was announced by Works Council President Daniela Cavallo.

The group itself is not the problem: Volkswagen Group, which owns ten brands, will become the world's second-largest automaker in 2023, with sales of about 8.9 million cars and light commercial vehicles and a global market share of 10.9%. Total sales increased by 11.9%, above average, 40% of which came from Europe.

But Volkswagen's core brand is faltering. These problems have been evident for years, for different reasons: strong construction and high investment in new electric models, currently low demand – there are many construction sites in Wolfsburg. That's why an austerity plan was announced a year ago, but it's clearly not enough.

Does it have any impact on the model range?

Will this have a direct impact on the brand’s product range? Probably not. These plans are long-term; restarts of individual models require several years' notice. “The car model policy has been adjusted,” Professor Ferdinand Dudenhöffer from CAR (Centre for Automotive Research) in Bochum told t-online. Dudenhoff said the problem was largely caused by costs and underutilization of Volkswagen plants in Germany.

VW has already separated itself from unprofitable models: the Passat is only sold in Europe as a variant (produced by Skoda in the Czech Republic), while the T-Roc will no longer be sold as a convertible in the future. The Arteon is also a thing of the past as a unique Passat coupe. The Up small car and T6.1 transporter were also discontinued due to their inability to meet current cybersecurity requirements. Take a look at the details:

Electricity problem

The ID. range of electric cars has not been as successful as Volkswagen's gas-powered models such as the Golf, Polo, Tiguan, T-Roc or Passat. The Volkswagen brand has sold just over 1 million electric vehicles since 2020, while Tesla delivered 1.8 million vehicles in 2023 alone.

As funding for electric cars bleeds, it becomes more difficult for all German manufacturers to offer electric cars to customers: ID.3 registrations fell from 6,370 to 935 between June and July 2024. The retro Bulli ID.Buzz also didn't hit the market as well as one might have hoped – probably due to the starting price of almost €70,000. A cheaper base model with a price of around 50,000 euros and a smaller battery, as well as other variants such as the sporty GTX should do the trick.

There are some reasons for optimism in the development of the large model ID.7, which is being produced at the Emden plant: after an initial lull, demand is said to be expected to accelerate: the company has therefore set production targets According to “elektroauto-news.net” According to reports, car production at the Emden plant will increase to about 190,000 vehicles per year next year, 50,000 more than planned.

Lack of affordable cars

However, in the field of economical electric cars, Volkswagen does not want to bring the ID.2, a small car with a starting price of about 25,000 euros, to the market, and will not launch the cheaper ID.1 until 2026. Competition has clearly intensified. Renault will launch the electric R5 at the end of this year, Citroën will launch the e-C3, starting at 23,300 euros, and other models may also be launched next year. But regardless of electric cars: Volkswagen doesn't currently offer a cheap internal combustion engine either.

Challenges posed by new CO2 emission limits

Starting in 2025, Volkswagen will face another challenge: new CO2 emissions targets will come into effect in the European Union. In the future, automakers will have to produce more cars that emit fewer pollutants, either electric or hybrid. It is calculated that the brand will need to increase electric vehicle sales by 15% to achieve this goal. By then, 25% of cars sold must be electric, up from 9.7% currently. To achieve this, a new price war may begin next year – good for customers but difficult for manufacturers whose profit margins are shrinking.

Volkswagen hopes to invest 180 billion euros in research and development in the next few years, including 120 billion euros in digitalization and electric vehicles, and 60 billion euros in the internal combustion engine field alone. “All car manufacturers in Europe and the United States need internal combustion engines again, which is why investments are again being made in them. This also applies to the Volkswagen Group,” said automotive expert Dudenhöffer. The facelifted Golf has already demonstrated what a modern plug-in hybrid is capable of: more than 100 kilometers of pure electric range and still has a combustion engine under the bonnet – something that could tempt key customers to buy one.

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