Volkswagen outlines four-year turnaround plan as profits plunge and pressure mounts

Volkswagen has unveiled a sweeping four-year overhaul aimed at restoring profitability, cutting costs and accelerating its EV transition after a sharp drop in earnings.

The Volkswagen Group has outlined its comprehensive four-year plan that aims to steer it in a more profitable direction while it seeks to become the world’s “most attractive” automaker by 2030.

This comes in the wake of a sharp drop in profitability, with operating profits having fallen by 53% in 2025, amid US tariff challenges and slowing demand in China, among other factors, while operating margins fell from 5.9% to 2.8%.

Simply put, the automotive giant is selling fewer cars and making less money on each unit.

This has forced some difficult decisions for the company, including a plan to reduce the workforce by around 50,000 people across the Group by 2030.

But it’s not all doom and gloom, as Volkswagen has a comprehensive action plan to turn things around.

Speaking at Volkswagen AG’s virtual Annual General Meeting this week, Group CEO Oliver Blume outlined eight strategic pillars that would help it achieve an operating return of 8% to 10% by 2030, resulting in significantly higher net cash flow.

These include reduced complexity, a stronger focus on technologies, reduced overcapacity, strengthened regional responsibility, increased operational excellence, a streamlined investment portfolio, and simplified Group management.

“We are making the Volkswagen Group even more robust and competitive. To that end, we have mapped out a clear plan for the future. We are positioning ourselves to be even more financially resilient and further improving our future readiness in terms of costs, structure and technology to counter external influences and growing risks in a world that has radically changed,” Blume said.

“Over the last three years we have given our Group an entirely new structure and ensured its stability. That is why, in the midst of the greatest transformation our industry has ever seen, we are in a position to act and are resolutely driving the transformation of our company forward towards the next phase,” he added.

Reduced complexity will mean fewer overlapping models and platforms in Volkswagen Group’s portfolio, while reducing overcapacity will result in factory output being aligned with demand.

The company is also building on its European electric vehicle leadership with the introduction of new entry-level EV models such as the Volkswagen ID. Polo, ID. Cross, Cupra Raval, and Škoda Epiq.

On the South African front, uncertainty exists over the future of the internal combustion-engined Polo hatchback, which forms the backbone of the local Kariega plant’s export programme.

However, the local division is investing in new products such as the Polo-based Tengo SUV, and there are strong rumours of a compact bakkie product being released for the local market. Yet it remains to be seen whether the volumes achieved by these new products will fill the vast void that would be left by the Polo’s possible global discontinuation.