July 13, 2026 - Volkswagen Sales Keep Sliding

This is the Telemetry Transportation Daily for July 13, 2026, and I'm Sam Abuelsamid, Vice President of Market Research for Telemetry. 

Not so long ago, the Volkswagen Group was the largest automaker in the world by sales. But in the 2020s, those sales volumes stagnated and more recently declined. There are a variety of factors leading to this, including the company's struggles to gain traction with its electric vehicles outside of Europe and, especially, the challenges in the Chinese market. So far in the first half of 2026, VW Group sales are down 6.3% globally, largely driven by a 25.9% decline in China. The Chinese market as a whole is down about 20% in the first half of this year, but as has been the trend for all non-Chinese OEMs in the last several years, VW's sales dropped even more. 

There has been a structural shift in the Chinese market since the beginning of the decade. Foreign brands long had more than 60% share of the market. However, as domestic brands have continued to improve in design, quality, and cost, they now represent more than two-thirds of the market. Of course, that cost advantage is in part driven by a variety of subsidies and government support for many of the domestic brands that have only launched in the past decade. Many of those new automakers are also losing money. But VW group sales in China have declined from almost 3.6 million in 2020 to 2.6 million in 2025 and are continuing to drop. 

There is a significant risk that by the end of 2026 or sometime in 2027, the Hyundai Motor Group will overtake VW as the second largest automaker after Toyota. HMG is far less dependent on China and has had significant growth in North America and Europe. 

VW management is planning significant restructuring that includes the potential closure of four German factories and up to 100,000 layoffs to cut costs. VW is also planning to simplify its complex model lineup by eliminating up to half of the nameplates by 2030. Especially since introducing the various ID electric models, VW has a lot of duplication in similar segments like the ID3 and Golf or ID4 and Tiguan. Many of those are now expected to be consolidated in the coming years. None of this will be easy, as there will be significant pushback from unions, including IG Metal.