Volkswagen had a poor 2024, with gross sales falling and Europe’s greatest automobile maker even elevating the prospect of closing factories in Germany. This yr could possibly be even worse.
The producer’s deliveries danger slumping once more as a result of its namesake VW model doesn’t have a brand new electrical automobile coming in 2025, with key merchandise pushed again amid delays creating software program. The issues are starkest in China, the place producers led by BYD are dominating with reasonably priced electrical and hybrid fashions. Within the US, the place President-elect Donald Trump is threatening tariff hikes, VW nonetheless doesn’t supply any bakkies common amongst American customers.
The voids in VW’s line-up are complicating CEO Oliver Blume’s bid to restructure the economic behemoth, which is reeling from overcapacity and intensifying competitors. Whereas Blume struck a deal late final yr with unions to chop prices in Germany and is relying on partnerships with Rivian Automotive and Xpeng to bolster Volkswagen’s choices within the US and China, these new fashions gained’t be accessible till later this decade.
“For the following yr or so, VW is compelled to promote outdated expertise to new clients,” stated Matthias Schmidt, an automotive analyst primarily based close to Hamburg. “That’s going to be troublesome.”
Volkswagen continues to be profiting handsomely from its common combustion-engine fashions, however its guess on totally electrical automobiles isn’t enjoying out as deliberate. Gross sales are stagnating in Europe and slumping within the US as clients are turned off by waning subsidies and patchy charging infrastructure. The producer has contributed to the malaise by introducing its first electrical fashions years later than deliberate and with glitchy software program.
In China, a key revenue driver for Volkswagen, the marketplace for luxurious EVs did not take off, hurting the prospects of fashions made by its upmarket manufacturers together with Audi’s Q8 e-tron and Porsche’s Taycan. Within the mass market, VW is struggling to compete with BYD, Nio and Xiaomi, whose aggressively priced plug-in automobiles boast massive screens and complicated voice-recognition expertise. The producer additionally doesn’t supply any range-extended EVs which have turn into common on this planet’s greatest automobile market.
‘Individuals aren’t shopping for’
“The principle concern with VW is the product,” stated Stephen Reitman, an analyst at Bernstein. “They’ve this manufacturing capability for battery-electric automobiles that folks aren’t shopping for.”
Stellantis plans to introduce new electrical fashions this yr together with the Jeep Wagoneer S and the Fiat Grande Panda because it seeks to win again market share within the US and Europe. Renault is betting on demand for brand new reasonably priced EVs together with the Renault 4. BMW is beginning its greatest overhaul in years with the primary of its Neue Klasse EVs, a midsized SUV with a windshield-spanning display that’s anticipated to run round 800km earlier than needing to recharge. Serial manufacturing is because of begin this yr in Hungary.
Learn: Volkswagen builds millionth Polo for export at E Cape plant
Blume is taking steps to plug Volkswagen’s portfolio gaps. The VW model in November began manufacturing of the Tayron, a big SUV additionally offered as a plug-in hybrid, with deliveries because of start this yr. The group is refreshing common combustion-engine fashions together with the VW T-Roc and Audi Q3 and is getting ready deliveries of the Skoda Elroq, one in every of its most reasonably priced electrical SUVs. In Europe, Volkswagen has managed to defend its market share because of sturdy demand for its petrol-powered fashions. It has additionally drastically improved in-car software program, although Schmidt stated that the VW model’s picture continues to be hurting from its early missteps.
Subsequent-generation fashions that analysts price as potential gamechangers — together with the ID. 2all, an EV priced beneath €25 000 — gained’t begin deliveries till 2026. When previewing the automobile two years in the past, VW stated it is going to be as spacious because the Golf and as reasonably priced because the Polo, two fashions which have offered a greater than 57 million items mixed since their introduction within the mid-Seventies.
In China, Volkswagen is aiming to regain market share beginning subsequent yr, when automobiles developed with Xpeng hit showrooms. Blume has promised they’ll embrace expertise that can higher match native tastes. The group goals to promote 4 million automobiles yearly in China by 2030, up from 2.93 million final yr.
“The introduction of latest fashions is one resolution, however it’s simply as vital to keep up our broad portfolio,” stated Stefan Voswinkel, a VW spokesman. “We have now labored onerous over the previous few years and have actually good fashions with high-performance software program and prime quality.”
Within the US, the place enterprise will get extra difficult if a Trump-led White Home imposes costlier tariffs, VW is getting ready bakkies and rugged SUVs by way of its resurrected Scout model. The marque plans to supply electrical, hybrid and range-extended EV choices, however they gained’t arrive till 2027, and their reputation could in the end depend upon whether or not incentives are in place to cut back their sticker costs of roughly $60 000.
Learn: VW plans entry-level EV for lower than R390 000
Uncertainty can be hitting Volkswagen nearer to house. Germany is reeling from two years of recession and bracing for snap elections in February. EV gross sales plummeted in Europe’s greatest financial system in 2024, and Blume has warned that circumstances within the nation are inadequate for industrial firms to face up to stiffer competitors. VW’s union deal to cut back German capability and labour prices is only a begin, Bernstein’s Reitman stated.
“It’s good to chop prices, but it surely’s additionally about discovering methods to make your merchandise promote higher,” he stated. — Monica Raymunt, with Jamie Nimmo, Albertina Torsoli, Wilfried Eckl-Dorna and Craig Trudell, (c) 2025 Bloomberg LP
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