Volkswagen is betting on sharply higher profits per vehicle and expansion into new markets such as India as it confronts a profound shift in the global automotive industry and a steep decline in its once-dominant position in China.
The group announced what it described as “the most profound strategic transformation in its history” on Thursday night, setting out a Future Plan 2030 designed to adapt the company to a market in which Chinese manufacturers dominate much of the electric vehicle value chain and are increasingly exporting their products worldwide.
At the centre of the plan is a target to raise Volkswagen’s profit margin on sales to 9%, more than double the 3.8% recorded in the first half of this year. To achieve that goal, the company plans to reduce its production capacity from 12 million vehicles a year to nine million, a restructuring that will involve plant closures, including four in Germany, for which alternative uses are being sought.
The group will also implement an additional reduction in employment on top of the 50,000 jobs already announced through 2030. Since 2024, Volkswagen has accumulated adjustments affecting about 100,000 jobs.
The cuts are nevertheless less severe than had been expected. In June, German media reports suggested that an additional 100,000 jobs could be affected. The final figure was reduced by half. Some company sources described the agreement as closer to a minimum settlement than a far-reaching restructuring, while other market voices said the plan was ambitious but that achieving a 9% return on sales appeared possible given the scale of the adjustment.
China, however, remains the central challenge. Volkswagen has devoted only a brief section of its latest announcement to its largest market, where its sales have fallen steadily since 2019. The company said it was adapting to new growth forecasts for the Chinese automotive market while expanding its export business towards the global south.
India has emerged as a particular focus within that expansion, according to sources close to the company. Volkswagen has a relatively small presence in the country but recorded rapid growth in 2025, selling just over 115,000 vehicles, an increase of 34.9% from the previous year.
Experts cited in the source material describe India as the only market capable, in terms of volume, of replacing the sales Volkswagen has lost in China. They caution, however, that the company lacks the product portfolio needed for rapid expansion in the Indian market, where demand remains large but comparatively immature and smaller vehicles are particularly important.
The scale of Volkswagen’s decline in China is stark. In 2019, the group sold 4.23 million cars and vans there, accounting for 39.4% of its worldwide deliveries. By 2025, Chinese deliveries had fallen to 2.69 million, reducing the market’s share of Volkswagen’s global sales to 31%.
That represents a loss of 1.54 million annual sales compared with the pre-pandemic period. The decline accelerated further in the first half of 2026, when Volkswagen’s Chinese sales fell 26% from the same period a year earlier. China’s share of the group’s worldwide deliveries consequently fell to 24%, 15 percentage points below its 2019 level.
Volkswagen has attempted to respond with a major product offensive, announcing in April plans to launch 50 electrified vehicles in China by 2030, including plug-in hybrids and fully electric models, with 20 due to arrive this year. Yet the transition to electric vehicles presents an especially difficult challenge: according to Automobility data cited in the source material, nine of China’s ten largest electric vehicle sellers are Chinese, with Tesla the only non-Chinese manufacturer in the top ten.
For Volkswagen, the strategy in China is therefore shifting from defending past volumes to making higher returns from a smaller market presence, while India and other emerging markets become increasingly important to the company’s future growth ambitions.
