The Price of Change: Volkswagen's Struggle for the Future
It is rare for Volkswagen’s Executive Board to spend an entire night negotiating with the labor union to reach an agreement on a restructuring plan of such far-reaching implications. In early September of this year, that is exactly what happened. The restructuring plan, with far-reaching consequences for employees and locations, was unanimously approved by the Board of Directors. This took place against the backdrop of a trend that extends beyond the borders of Wolfsburg: Chinese electric-car manufacturers are increasingly gaining market share with affordable electric vehicles in markets where Volkswagen and other German automakers have traditionally had a strong presence. Whether the new plan will be enough to make up for this shortfall remains to be seen in the coming years.
The Largest Restructuring in Volkswagen's History
The centerpiece of the restructuring plan is the elimination of 50 000 jobs (FuW, 4.09.2026). Combined with the reduction of approximately 50 000 jobs already agreed upon in 2024, this results in a planned total reduction of 100 000 jobs out of a global workforce of approximately 660 000 (Euronews, 4.09.2026). The future of four German plants, Emden, Zwickau, Neckarsulm and Hanover, remains uncertain for now: The supervisory board identified excess capacity of 500 000 vehicles in Europe, and no competitive follow-on production has currently been secured for the four plants starting in 2031. A plan for a sustainable production structure is to be developed by the end of June 2027 (FuW, 4.09.2026).
With this plan, Group CEO Oliver Blume is pursuing a clear goal: By 2030, the return on sales is to rise to 9 percent (FuW, 4.09.2026), while simultaneously reducing the model lineup by up to half (FuW, 8.09.2026). The planned investments for the coming years are also lower than previously anticipated. Analysts at Deutsche Bank view the agreement less as a strategic breakthrough and more as evidence that the company is, in fact, capable of making difficult decisions (FuW, 4.09.2026).
China is pulling ahead, while Volkswagen is lagging behind
The pressure to act behind the restructuring plan comes primarily from one source: electromobility and the rise of Chinese manufacturers. In the EU, the share of new fully electric vehicle registrations rose to about 20 percent between January and May 2026, significantly more than in the previous year (ACEA, 23.06.2026). Volkswagen’s own sales account for only about 11 percent electric vehicles, meaning it is lagging behind the market (FuW, 8.09.2026).
At the same time, Chinese manufacturers are also gaining market share in Europe. Chinese cars, led by brands such as BYD, have tripled their market share in Europe since 2024 (FuW, 8.09.2026). One factor contributing to this is a dedicated plant in Szeged, Hungary, which allows them to partially circumvent the effects of existing EU countervailing duties on imports.
This creates a conflict of objectives for German policymakers: According to «WirtschaftsWoche», Environment Minister Carsten Schneider intends to push for import duties to be imposed on Chinese hybrid vehicles as well in the future. Otherwise, the VW restructuring decisions could come to nothing (FuW, 8.09.2026).
A Comparison of Volkswagen and BMW
Just how serious the situation is at Volkswagen becomes clear when compared to BMW, which is similarly heavily dependent on the shift toward electric mobility and the Chinese market. Just like VW, BMW is also struggling in China: Sales there plummeted by 30 percent in the second quarter of 2026, after the company had already been forced to lower its profit forecast several times (Reuters, 14.07.2026). With its new “Neue Klasse” model series, the company aims to turn things around, but industry experts doubt whether the pace will be fast enough to keep up with Chinese development cycles (Reuters, 14.07.2026). Financially, however, there is a clear difference between the two companies: In fiscal year 2025, BMW posted a net profit of 7.45 billion euros, a decline of just 3 percent. At Volkswagen, profits plummeted by over 40 percent during the same period (AFP, 12.03.2026). BMW opted early on for a dual strategy combining internal combustion engines and electric vehicles, rather than committing to one approach exclusively (AFP, 12.03.2026). This likely provided the company with operational stability in the short term, even though the transformation is not yet complete for either manufacturer. The stock price performance over the past five years accordingly shows that the market has different levels of confidence in the two stocks, which is also reflected in their valuations.
However, Volkswagen does not seem to be entirely without a chance. The company is attempting to regain a stronger foothold in the volume segment with a new generation of more affordable electric cars. One example is the new ID. Polo, which will be launched in 2026. The all-electric model starts at around 25 000 euros in Germany and is expected to offer a range of up to 454 kilometers, depending on the battery version. With this, Volkswagen is targeting precisely the segment where the price advantage of Chinese manufacturers has become particularly evident. Whether the ID. Polo will actually be a sales success, however, remains to be seen. The decisive factor will not be solely how many vehicles Volkswagen sells, but whether the company can once again achieve competitive margins with such models. Nevertheless, it could serve as an important test for Volkswagen to determine whether the company can bring electric cars to market faster and at more competitive prices in the future.
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What the Restructuring Plan Means for Investors
Last week’s agreement appears to have prevented an immediate escalation between management, employee representatives, and the German state of Lower Saxony. With the recently adopted “Future Plan 2030,” Volkswagen has, for the first time, committed to a concrete roadmap for the coming years (FuW, 4.09.2026).
Whether this will be enough to regain a level playing field with Chinese manufacturers will only become clear in the coming years. Given its low valuation, the stock remains primarily a bet on the success of the restructuring, supported in part by the political willingness to back the company and the regions that depend on it (FuW, 8.09.2026).
How Volkswagen and BMW fare in comparison is likely to depend largely on how quickly their respective restructuring efforts or model offensives translate into operating results.