Volkswagen history charts repeated restructuring from Beetle roots to EV era

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Volkswagen history and restructuring

Highlights

Volkswagen's 2015 diesel emissions scandal cost the group over 32 billion euros and accelerated its strategic pivot to electric vehicles, with ID.3 production starting in 2019.
In 2024, CEO Oliver Blume agreed with unions to cut 35,000 jobs at VW in Germany by decade's end, escalating in 2026 to 100,000 planned group-wide layoffs and possible closures at four plants including Zwickau.
China's market, once a key profit driver for Volkswagen, turned challenging after BYD eclipsed VW as top-selling automaker in 2023, intensifying competition from domestic players like Xiaomi and impacting brands like Porsche.

From wartime origins to global scale

As reported by Reuters, Volkswagen was founded in 1937 by the Nazi labour organisation German Labour Front after Adolf Hitler backed the idea of a mass-market "Volkswagen" designed by Ferdinand Porsche. Plans to build the car for industrial workers were overtaken by World War Two, when production shifted to armaments and utility vehicles for the German army.

After Nazi Germany surrendered in May 1945, British Army engineer Ivan Hirst helps keep the Wolfsburg factory operating and restarts Beetle production. The model becomes central to West Germany's postwar economic rise, and in 1960 Volkswagen is privatised, with Lower Saxony retaining a 20% stake that it still holds today.

Volkswagen broadens beyond the Beetle in 1965 with the acquisition of Auto Union and the Audi brand, beginning its transition into a multibrand manufacturer. The 1974 launch of the Golf strengthens its mass-market position, while production in China starts in 1983 with the Santana in Anting, laying the foundations for a market that supports the group's business model for decades.

Under Ferdinand Piech, who becomes CEO in the 1990s, Volkswagen enters a period of aggressive expansion that adds brands including Bentley, Lamborghini and Bugatti. In 2008, Porsche's failed takeover attempt ends in a reverse outcome, with Volkswagen absorbing the sports car maker while the Porsche and Piech families remain leading shareholders through their holding company.

Diesel crisis, China pressure and new cuts

The group's modern turning point comes in 2015, when the diesel emissions cheating scandal triggers one of the auto industry's biggest corporate crises. The fallout costs Volkswagen more than 32 billion euros in fines, refits and legal expenses and accelerates its push into electric vehicles, highlighted by the start of ID.3 production in Zwickau in 2019.

That transition proves costly and contentious. In 2021, then-CEO Herbert Diess warns that a poorly managed EV shift could put 30,000 jobs at risk, and he leaves the following year amid labour tensions and problems tied to the company's software strategy.

At the same time, China turns from a key profit engine into a major challenge. Porsche's 2022 initial public offering is followed by a sharp deterioration in its China sales, while BYD overtakes Volkswagen in 2023 as the country's top-selling automaker and domestic rivals such as Xiaomi intensify price and technology competition in the fast-growing EV market.

By late 2024, CEO Oliver Blume agrees with unions to cut 35,000 jobs at VW in Germany by the end of the decade while avoiding plant closures. Pressure then mounts further after sweeping U.S. tariffs announced in April 2025 add billions of euros in annual costs, and by mid-2026 management is pursuing a broader restructuring that includes doubling planned layoffs across the group to 100,000 and considering closures at up to four plants, including Zwickau.

Our earlier article on BYD Malaysia’s local assembly push explained how the EV maker partnered with Inokom (a Sime Darby unit) to assemble CKD vehicles in Kulim, signaling a shift from plans for a new plant in Tanjung Malim. We also noted that the change was linked to export conditions set by Malaysia’s trade and investment authorities, while details on models and production timing were still pending.

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