Volkswagen Group will slash its global model portfolio by half before 2030, the company confirmed after a marathon supervisory board meeting, as first-half deliveries in China tumbled 26.1% year on year to 971,000 units—the lowest six-month figure since 2010. The decline, which dragged worldwide group deliveries down 6.3% to 4.125 million vehicles, marks an acceleration of a trend that has seen the German carmaker’s Chinese sales fall by a third since 2019. The restructuring aims to cut costs, reduce complexity, and lift returns toward a target of 8–10%, with production capacity to be scaled back to around 9 million vehicles annually, down from a pre-pandemic goal of 12 million.

The erosion of Volkswagen’s position in China, its most profitable market for decades, is traced by analysts in Shanghai to a late start in the electric transition. While Beijing pushed the industry toward EVs nearly 20 years ago, Volkswagen remained sceptical until Chinese consumers showed a clear preference, allowing domestic manufacturers backed by state-directed credit and local subsidies to seize the lead. The group’s first China-developed, fully connected electric model, the ID. Unyx 07, arrived only this year, after many households had already taken advantage of generous trade-in subsidies to switch to electric cars. The company says it is now launching 20 “intelligent and electrified” models in China, its largest-ever product offensive.

Viewed from Wolfsburg, the China shock is reshaping the entire group. Beyond halving the model range, the board plans to cut powertrain, trim, and equipment variants by up to 75% and eliminate parallel development structures across its ten brands. The supervisory board, under pressure from the state of Lower Saxony, the group’s second-largest shareholder, deferred a decision on the closure of four German plants and up to 120,000 job cuts, but the works council demanded clarity before the summer break, calling the uncertainty irresponsible. Berlin signalled that a strong auto industry and job guarantees are a government priority.

The picture is not uniform across German premium manufacturers. BMW Group reported a 4.2% drop in global first-half deliveries to 1.15 million units, but its performance split sharply by region: Europe and the United States grew 5.4% and 3.9% respectively, while China and Asia-Pacific contracted heavily. BMW’s electric sales accelerated, with 116,807 battery-electric vehicles delivered in the second quarter, up 5.2%, driven by a 38% surge in Europe following the launch of the new iX3 on the Neue Klasse platform. The contrasting fortunes underscore a fragmentation in which legacy carmakers that can offset China weakness with strength in Western markets are better insulated, while Volkswagen’s deep exposure to China forces a more radical overhaul. The next milestone is the detailed restructuring plan, which the supervisory board has urged management to present before the summer pause, alongside the market reception of Volkswagen’s new China-specific electric models.