Volkswagen Group, Europe's largest automaker, plans to reduce its annual production capacity to around 9 million vehicles, the company said Tuesday.
"Maintaining excess capacity over the long term is difficult," Volkswagen Group CEO Oliver Blume said in an interview with German business magazine Manager Magazin. "We are reviewing plans to cut capacity by up to another 1 million units to reflect global market conditions."
The global production capacity of Volkswagen Group, which includes brands such as Volkswagen, Audi, and Porsche, stood at about 12 million vehicles in 2019. However, it has been reduced by roughly 1 million units each in China and Europe through the COVID-19 pandemic.
If the plan proceeds as outlined, capacity will shrink by about 25% from its 2019 peak. Volkswagen Group's global deliveries reached 10.97 million vehicles in 2019 but fell to 8.98 million last year. "Nine million is the average in a market that has completely changed since the pandemic," Blume said. He added that there are "smarter methods than closing plants," noting that no decision has been made on whether to shut additional factories to reduce capacity. "We are reviewing every cost item," he said, not ruling out further job cuts. Volkswagen has already launched a sweeping restructuring that involves halting production at two of its 10 plants in Germany and cutting up to 50,000 jobs by 2030.
The Dresden plant, which halted vehicle production in December last year, will be leased to Dresden University of Technology for use as a research campus for artificial intelligence (AI) and robotics. The Osnabrück plant, still in operation, is being considered for acquisition by defense company Rheinmetall and others. Olaf Lies, prime minister of Lower Saxony — the second-largest shareholder in Volkswagen — recently proposed continuing vehicle production at the plant through a joint venture with a Chinese company.
