Here’s How VW’s Plan To Cut 50% Of All Models And 75% Of All Variants From Its Brands (Porsche, Audi, Bentley, Etc) Could Backfire

The woes of the Volkswagen Group are so well known and oft discussed in The Morning Dump that it’s almost not worth repeating them. One version is that the company’s hubris is to blame for all its troubles. This tendency to assume the company could do everything if it just threw enough engineers at a problem allowed it to underestimate Toyota and hybrids which led to Dieselgate and, in the fallout of that, led it to believe it could quickly catch Tesla as an EV automaker while completely missing the threat from China. Another version is that Volkswagen expanded at exactly the wrong time, buying too many brands and it got caught flat-footed.

Of course, nothing with Volkswagen is ever simple, and CEO Oliver Blume’s proposed plan to nix approximately 50% of all models and 75% of all variants from the Volkswagen Group lineup and cut back on production faces a lot of internal resistance. Someone who doesn’t have to care so much about what his own board of directors thinks is Tesla CEO Elon Musk, whose company just went the opposite direction and introduced a new Model Y variant.

BMW continues to be the strongest luxury brand in the United States and, in fact, BMW’s sales in the Americas now outweigh the company’s sales in China, which is a sign of how much the rise of the Chinese car industry has stymied German automakers.

Volkswagen’s Dangerous Game

My neck is still recovering from whiplash this morning. Yesterday, the story was the success of the Porsche 911, due in no small part to how many variants the brand offers. Today, Volkswagen Group CEO Oliver Blume and CFO Arno Antlitz are announcing that the way forward is a reduction of models by 50% and variants by 75%.

Here’s Blume, via Handelsblatt, explaining the why, if not specifically the how:

Blume said on Friday that the board was “continuing to drive the transformation” and was “taking responsibility for the sustainable future of the company with the most comprehensive realignment in the company’s history – at a time when the automotive industry is under great pressure worldwide.”

With his vision for the future, Blume aims to position the company more robustly and competitively, even in a massively challenging global environment. “We are limiting risks, unlocking new opportunities through our own strength, and sending a clear signal for a new beginning in Germany as a business location.”

This change is necessary as Volkswagen’s brands continue to suffer in China (VW’s brands were down 37% there in Q2 of this year), and as the company’s over-commitment to the EV head-fake and failure to develop its own software have eroded its income and margins. All of that, combined with a suddenly protectionist trade policy in the United States, have made it necessary for the company to consider dramatic steps. No one with any sense believes that Blume should just stay the course and hope it all works out in the end.

Is simplification of the lineup the way forward? I’m less sure.

Nothing I’ve seen explains in any detail which models are getting cut, where they’re getting cut, or what kind of variants are going out the window. It’s possible that Volkswagen Group hasn’t even finalized what that looks like. There’s some logic here and, until I see the full plan, I cannot fully dismiss it. My initial instinct is that it’s highly unlikely that anyone at Porsche would allow the company to cut variants of, say, the 911, which typically provides a lot of cash for the brand. Bentley, too, relies on variants to generate a rich margin. Lamborghini is probably also safe, although it’ll continue to be necessary for all of those brands to share platforms going forward.

It may seen a bit odd to Americans to consider that the biggest culprit here is probably Volkswagen’s namesake brand, mostly because Americans have a paucity of models to choose from. The rest of the globe gets many, many Volkswagen models. Does the company need the Taigo, the T-Cross, the T-Roc, the T-Roc Cabriolet (coming to Pebble Beach via The Autopian in 2045), the Tayran, the Tayman, and the ID.7 Tourer?

Okay, I made up one of those, but you probably don’t know which one. Simplifying this lineup is completely sensible. Not only does VW sell the Taigo, it also sells five different variants of that in-betweener small crossover. Śkoda has been a brightspot for Volkswagen Group, and it gets by with far fewer models and fewer variants. The same can be said for SEAT (assuming you break Cupra out as its own brand).

Reducing all of these Malcolm Gladwell-esque variants likely means being able to streamline and reduce production, which is key for the company to save money. Even though most of these vehicles are built on a small number of VW Group platforms, dedicating production to lower volume models that aren’t high-margin, high-priced vehicles like a 911 is inherently inefficient.

Accepting the logic of streamlining, I don’t necessarily accept the logic of cutting 50% of all models across all brands and 75% of variants. That’s a lot of cars. While there are some signs that legacy OEMs can utilize existing joint ventures with Chinese automakers to get back some demand in China, the future of Volkswagen is probably outside China. People like choices and in North America, where VW damn sure needs to be competitive, the greatness of both Audi and VW came from having competitive vehicles with a high degree of optionality.

I remember when my best friend got his Mk 4 Golf. He’s not like me, so he went with a non-GTI automatic four-door in black, but nicely optioned with the incredible purpleish blue-und-red backlit gauges and buttons. He could have also had a diesel or, if he was like me, a two-door GTI. The appeal of Volkswagen was getting what you wanted, and the company’s attempts to de-content cars and oversimplify with models like the NMS Passat made the brand a lot less interesting.

Looking at the United States, both Volkswagen and Audi are suffering from a lack of truly competitive or interesting products. Not only do the cars need to get better (it sounds like the Tiguan Turbo is a big step in the right direction), but there need to be more choices. How that gets balanced with this push is unclear to me, and I fear that Volkswagen could make the mistake of reducing its lineup to a few models that are generally not compelling.

The Lotus line used to be: simplify and add lightness. For Volkswagen, I think the company needs to go back to the fun cars it used to build. Think of it as simplify and add brightness.

Blume’s ‘Large Package’ Likely To Come In Pieces

I will admit to thinking, on occasion, that I could maybe do a better job than some automotive CEOs. I’m almost certainly wrong and, in the case of Volkswagen, I would never make so foolish an assumption. The politics of Wolfsburg and the various families who own Volkswagen are too complex. I would do a terrible job.

Blume did great work at Porsche and stepped into a VW Group still reeling from Dieselgate and trying to catch up on electrification/software. While I’m sure Blume would have done a lot differently with hindsight, the logic he followed was the logic that pretty much every automotive CEO followed at the time.

Something has to be done and Blume has offered a dramatic plan. My question is whether or not Blume thinks he’s going to get everything at once, or is strategically making a huge ask so that he can, at the very least, get some of what he wants. This is the logic of my daughter asking for an afternoon of screentime so she can get an hour.

This is the question I have after reading this Handelsblatt column, translated as “Blume’s large package is now arriving in individual parts.”

Germany’s most powerful auto boss had originally intended to present his future plan for VW as a comprehensive package.to bring it through the supervisory board. That would have created clarity – for investors, employees and managers.

Instead, the board now has to fight for each package individually : the investments, the personnel issues, and then – presumably sometime next year – the reorganization of the corporate structure. What was meant to be a major breakthrough has turned into a drawn-out process . And investors and employees are asking themselves: What exactly is going on?

One might add, somewhat maliciously: It’s going exactly as one would expect from Volkswagen. The company’s management system was originally supposed to be revised by March 2025, although the initial agreement was for 2024. Now it’s July 2026.

Is all this tsuris a bug or a feature? Did Blume expect a rubber stamp, or is he asking for more than he needs so he gets what he wants? It’ll be fascinating to watch this all play out over the next few months.

Behold, The Tesla Model Y Longboi

While VW is cutting back variants, Tesla is adding them. Specifically, the long-wheelbase Tesla Model Y that first appeared in China is coming to North America. I think the longboi Model Y looks a little better proportioned than the stock Model Y, and I also think that the 2x2x2 seating with center captain’s chairs is an ideal layout for a vehicle like this. It’s also an improvement over the cramped three-row option in the current Model Y.

At the moment, the only reason to order one is because you’re a huge Tesla fan, because the company is doing its usual business of offering an expensive “LAUNCH EDITION” for the diehards. While the base Model Y RWD is still a great deal at $37,900, the $61,490 price for the longer Model Y puts it in league with vehicles like the larger Kia EV9.

I’m guessing the regular, RWD longboi will come in closer to the Kia and its Hyundai twin.

BMW Is Still The Luxury Leader In The United States

I don’t know how I feel about the BMW iX5 yet. I guess I’ll have to see it in person. Of all the German automakers, I’ve long had the sense that BMW has the best plan and is producing the best products. If you look at the last generation of true EVs from the Germans it’s clear that, aesthetics aside, the BMW iX is far better than either the Mercedes EQ variants of the Volkswagen ID. I may prefer the Taycan, but as a mass-market car the iX was probably a better fit for most.

While BMW has all the same maladies in China as everyone else, it’s kicking butt here in the United States.

Per Automotive News:

BMW deliveries rose 13 percent to 102,713 in the second quarter with robust results by the 3 Series compact sedan, X3 compact crossover and X5 midsize crossover.

BMW sold 186,944 vehicles in the first half of 2026, up 4.7 percent.

Lexus was a distant second with sales of 88,760, a decline of 7.5 percent. Lexus’ U.S. deliveries totaled 169,712 for the first half, a decline of 5.2 percent. The drop in quarterly sales largely reflected the impact from one vehicle: the ES sedan, which has undergone a redesign and is just beginning to arrive at dealerships.

Mercedes-Benz remained in third place with retail sales of an estimated 75,000 passenger vehicles in the quarter. Mercedes has sold an estimated 145,000 passenger vehicles in the first half, down 3.5 percent.

Lexus could always catch up and, by next year, it might on the strength of the new ES. In the meantime, BMW is in a decent position and is, for the first time in a decade, selling more cars in the Americas than in China.

What I’m Listening To While Writing TMD

Sienna Spiro’s first album is out and it’s a good listen, if not maybe a little one note. The standout track for me is “Great Expectation,” which has an Adele punch with a bit of Amy Winehouse swagger.

The Big Question

Ok, you’ve got to cut half of all VW Group models. Go.

Top photo: Eaglemoss, VW