VW plans to phase out Seat brand amid deepening crisis

Volkswagen has cut its 2026 operating margin forecast to just 1% at best, down from a prior target of 4% to 5.5%, as roughly €10 billion in one-off charges — including a €6 billion writedown on its Porsche stake — drag the world's second-largest automaker deeper into crisis. The downgrade, announced on September 18, has set off a chain reaction across every brand under the group's umbrella and accelerated what is already the largest restructuring in automotive history.qz+1

A Cost-Cutting Machine in Overdrive

VW brand chief Thomas Schäfer told employees at a staff meeting in Wolfsburg on Monday that the company would ramp up its cost-cutting program, saying, "We have absolutely no time to lose". Around 16,300 departures have already been completed in Germany, with a total of nearly 28,800 agreed upon through 2030 — still short of the core brand's target of 35,000 German job cuts. Group-wide, the supervisory board approved a plan in early September to eliminate 100,000 positions by the end of the decade, roughly 15% of the global workforce, on top of 50,000 cuts already in motion.dw+4

Group finance chief Arno Antlitz told Bloomberg that "the market changes are profound and lasting," while works council chief Daniela Cavallo warned employees that the cost-cutting push would intensify further in the coming weeks. "Most of our previous profitability is gone. That's the plain truth," Cavallo said.all-about-industries+1

Pressures From All Sides

The margin collapse reflects a convergence of forces: U.S. tariffs, shrinking demand in China — where the group's head of China operations expects the passenger-car market to contract by 20% this year — rising competition from Chinese automakers, and European regulations that are shifting sales from profitable combustion-engine vehicles to less profitable EVs. Volkswagen also fell out of the Euro Stoxx 50 on Monday after 15 years in the benchmark, triggering forced selling by passive index funds.ad-hoc-news+1

Brands on the Chopping Block

The restructuring extends beyond job cuts. Volkswagen plans to reduce its model lineup by up to 50% and slash component variety by as much as 75% on next-generation vehicles. The struggling Spanish marque SEAT, which has not launched a new model since 2020 and accounted for less than 3% of global deliveries in 2025, is being evaluated for a "gradual phase-out," with its fast-growing sister brand Cupra set to absorb all future products. If discontinued, SEAT would be the first major auto brand to disappear since Ford ↘ 0.53% axed Mercury and General Motors ↘ 0.60% dropped Saturn and Pontiac in the early 2010s.carbuzz+2

Schäfer's remarks came as automotive workers across Germany held protests calling on management to secure jobs, with IG Metall union head Christiane Benner demanding that corporate leaders "take responsibility for Germany as an automotive nation".internationalfinance