The Volkswagen (VW) group dropped a bombshell. The group revealed to the Financial Times that it would be phasing out volume sellers to focus more on its more premium offerings—e.g. its more expensive, higher-profit models. What will happen to beloved, sub-$40,000 cars like the Jetta, the Golf, and the Audi A3?
For clarity, every mention of Volkswagen will refer to the VW group, unless otherwise specified as the Volkswagen brand of cars.
Volkswagen Group is moving away from affordable cars
The Volkswagen Group consists of nine car brands and one motorcycle brand. The Group covers Volkswagen, VW Commercial, SEAT, CUPRA, Audi, Lamborghini, Porsche, and Ducati. As it is, there are really only a few brands in the lineup that offer affordability in their ranks. Cutting options down even further is going to decimate VW’s offerings.
Specifically, by up to 60%.
“The key target is not growth. We are (more focused) on quality and on margins, rather than on volume and market share.”Arno Antlitz, Chief Financial Officer, VW Group
What we know so far is that VW will be cutting back specifically on their internal combustion engine (ICE) models in the European market by about 60%. Across the pond, the Volkswagen Group sells about 100 different models total. This is a fairly significant drop in number of vehicles offered.
We are unsure of how this will affect the U.S. market at this time.
The “People’s Car” is going premium
Apparently, Volkswagen’s definition of “people” is changing.
If you didn’t know, Volkswagen literally means “people’s car” in German, the group’s native tongue. But how many folks are going to be able to afford the folk’s wagon when the only remaining options start at $70,000 or more?
The VW group is pivoting to focus on more profitable vehicles in their stable, which only includes its premium sedans, coupes, crossovers, and SUVs.
Will Volkswagen focus more on EVs?
The slashing of 60% of gas and diesel-powered vehicles in Europe indicates that VW, like many other brands, will be turning their efforts toward electrification. It hasn’t been explicitly stated that that’s the plan, but it’s seeming likely. If cheaper, ICE models are the ones on the chopping block now, it’s unlikely that VW would put much effort into developing new ICE cars or SUVs in the future.
The premium electric car market is big right now. Just look at Tesla and Rivian. With the EPA looking to ban all gas-powered cars by some unnamed date, select international countries setting ICE-cancellation dates, and major automakers proclaiming a commitment to EVs, it’s inevitable that more and more automakers would head in that direction.
And if a company needs to scrap what they’ve been doing for decades to compete in an incredibly competitive market, there’s some logic to focusing on cars and crossovers with high profit margins. Automakers can sustain their overhead with fewer sales, and focus more on development rather than pure production.
Maybe, in the future, we’ll see the People’s Car return.
Which VW models will be getting the ax?
Now, VW hasn’t confirmed yet if they’re enacting these changes only in Europe, or if it will be a global action. But in a way, it’s already started. Volkswagen unceremoniously murdered the awesome, cheap VW Golf base model back in 2021 due to low sales numbers—or, possibly, to low profit margins.
Autoblog reports that this is a big change from 2018 when the now-disgraced former VW chief executive Martin Winterkorn claimed that VW would beat out Toyota and GM in volume sales.
But, for the cheaper, family-friendly Audi and Volkswagen-branded cars and SUVs… watch out.