The Volkswagen Group aims to improve the quality and profitability of its cars by cutting up to half the models it sells, as part of a strategy to dramatically reduce costs and complexity.

The firm posted a dramatic drop in profits in the first half of 2026, returning a margin of just 3.8%, which it says highlights the urgent need for a radical restructuring of the entire company.

It plans to significantly cut its overheads by trimming up to 100,000 jobs globally, and reducing the amount of crossover and complexity in its vehicle line-up is another fundamental strand of its strategy to grow margins.

Giving more details of the plan, which was announced earlier this month, company CEO Oliver Blume told journalists that the firm is preparing “a major reduction of up to 50% of our product” in a bid to reduce manufacturing and development costs, while clarifying and strengthening the market positioning of its models.

“We want to focus our expenditures on clear-focused products – to improve innovations, to improve technologies, to improve equipment, and to improve the quality of the single products – then to achieve higher volumes with more focused products.

“To achieve a higher profit margin per product – that’s the intention.”

He added that the company knows it has “substitutions in some segments between the brands”, referring to the significant degree of internal competition between equivalent models from the volume brands Volkswagen, Audi, Skoda, Seat and Cupra.

The Volkswagen Golf, for example, provides the basis for four other technically identical C-segment family hatchbacks from each of those sibling brands - with little variation in pricing, performance or equipment. It’s the same story for the Polo supermini, T-Roc crossover and Tiguan SUV - and each of the Volkswagen Group’s electric cars has at least one direct equivalent at a sibling brand, such as the Porsche Macan Electric and Audi Q6, for example.

The impending rationalisation will seek to alleviate some of this intra-brand competition by “cleaning it up and reducing complexity”, according to Blume.

He said the firm will start by cutting its “high number of derivatives”, referring to individual trim levels and equipment packages, which will account for the bulk of the cuts. Blume added that while the number of cars left in the resulting line-up “will still be far higher than what we see in the competition”, it will nonetheless amount to a halving of the Volkswagen Group’s portfolio.

“Every remaining model shall lead its segment in driving and technology experience,” he vowed. 

The firm has evaluated its parts and supply chains and determined that it could “reduce the number of available equipment options by up to 75% without compromising product substance”, Blume explained, adding that increased sharing of parts like seats and windscreens will cut component complexity by up to 90%.

“The customer will continue to have a meaningful choice,” he pledged. “We are cutting what is not ordered and will scale what the customer demands.” 

When it comes to axing entire model lines, he said that will be a “longer programme because we have our current portfolio currently in production and in the market”. Taking a car off sale before its scheduled retirement – and without a replacement – is an expensive process and leaves production lines out of action. 

“Step by step, we will clean it up and reduce complexity,” he said, without acknowledging recent reports that models including the Porsche Taycan, Skoda Fabia and US-market Volkswagen Jetta could be among those headed for retirement.