Volkswagen recalls 4 million cars in the largest campaign since the "Dieselgate" scandal.

arabictrader.com

Volkswagen’s plan to cut jobs and restructure its plants in Germany is becoming a broader indicator of the struggles facing European automakers. Chinese competition has been putting pressure on European producers, particularly amid the growth of the electric and hybrid vehicle industries, the declining market share of gasoline and diesel, and rising production costs across the Old Continent.

At the end of 2024, Volkswagen agreed with labor representatives to reduce headcount and production capacity in Germany. The Financial Times reported that the company had already drawn up a plan to cut 50,000 jobs by 2030 and reduce its domestic manufacturing capacity by around 500,000 vehicles, before U.S. tariffs, the conflict in the Middle East, and worsening conditions in China prompted it to consider broader measures.

Arno Antlitz, Volkswagen’s Chief Financial and Operating Officer, said the company reduced overhead costs by around 1 billion euros ($1.1 billion) in the first quarter, but the operating margin before special items remained "very low" at 4.3%. He emphasized that tariffs have taken effect, competition in China is intensifying, and Chinese automakers are exporting their competitive pressure to Europe.

In 2025, Volkswagen delivered approximately 8.98 million vehicles globally, a slight decrease of 0.5%, while its deliveries of all-electric vehicles rose 32% to 983,000 units. However, the Group's deliveries in China dropped 8% to 2.69 million vehicles, and electric vehicle deliveries in the Chinese market plunged by 44.3%.

A report by the International Energy Agency indicates that China produced 16 million electric vehicles in 2025, about 20% higher than its domestic demand, driving Chinese EV exports to double to more than 2.5 million vehicles. Electric vehicles accounted for over 35% of total Chinese auto exports, up from around 20% a year earlier.

Volkswagen says its electric vehicle deliveries in Europe remain strong, with more than 70% of its global all-electric sales in 2025 coming from Western Europe, totaling 719,400 vehicles—a 64.6% increase year-on-year. However, this European success neither offsets the pressure in China and the United States nor resolves the