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Volkswagen Group decided to invent a new business model: reasons, strategies, challenges

 

  

 
KoRe proverb: A giant that stands still becomes smaller every day.  

In today's era of unrelenting change, hyper-competition and challenging business environment where customer loyalty is fading business models have shorter shelf life.

No matter how successful your existing business model was so far, it will be challenged by new realities and new business models.

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"Past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models." ~ Akira Mori

 		 

 
   

Volkswagen Group is inventing a new business model

 

  

 
 

Summary

In 2026, the Volkswagen Group reached a strategic crossroads. Both the Management Board and the Supervisory Board acknowledged that the company’s long‑standing business model – built on scale, engineering excellence, and incremental innovation – was no longer aligned with the new global reality.

The EU economy is experiencing prolonged stagnation and structural decline. Germany faces severe industrial challenges. Chinese automakers were reshaping the competitive landscape with faster development cycles, lower production costs, and increasingly attractive electric vehicles.

Demand for Volkswagen’s products was weakening, and the company faced intensifying competition, slowing EV growth, and rising internal complexity.

CFO Arno Antlitz articulated the need for a fundamental transformation: fewer models, fewer platforms, lower costs, faster decisions, and new revenue streams beyond traditional car sales.

 

Business Model

Dynamic Business Models

New Business Models

10 Driving Forces

Innovative Business Models

Business Model Innovation in the AI era

European Union (EU)

Decline of the EU Economy

EC accelerates the decline of the EU economy

Decline of the German Economy

  

 
KoRe proverb: When the winds of change rise, build the skills that let you sail, not the walls that keep you still  

The shift is not cosmetic – it is structural, cultural, and strategic. It is a transformational change that needs to be approached holistically.

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"When the wind changes, the wise adjust their sails."
~ KoRe proverb

  

 

 
   

① Why Volkswagen Must Reinvent Its Business Model

Volkswagen’s traditional strengths – engineering depth, broad model range, and global scale – have become liabilities in a market that rewards speed, simplicity, and cost efficiency.  Chinese competitors have mastered rapid innovation cycles and cost‑effective EV production, eroding Volkswagen’s market share in key regions.

 

  

 
KoRe proverb: A ship that trusts yesterday's winds may find iteslf stranded in tomorrow's calm watrs  

The company’s internal complexity, high administrative costs, and slow decision‑making have further constrained its ability to respond.

The leadership concluded that the old model cannot survive the new era. Reinvention is not optional; it is existential.

  

 
   

"A giant that stands still becomes smaller every day."
~ KoRe proverb

 

  

 

 
   

② The Strategic Trigger: China’s Rise and EV Market Realities

 

  

 
 

The most immediate catalyst for change is the success of Chinese brands. Their vehicles are not only cheaper – they are increasingly desirable, technologically advanced, and tailored to modern consumer expectations.

This shift has reduced demand for Volkswagen's products, especially in the EV segment where growth is slowing globally.

Volkswagen, once the disruptor of global automotive scale, suddenly became the disrupted. The company's leadership acknowledged that its traditional business model no longer matched market reality.

 		  KoRe proverb: If your neighbor builds a faster mill, your grain will choose its own path.

 
KoRe proverb: When a new river carves its path, the old banks must reshape themselves  

Volkswagen's challenge is twofold:

1. Compete with China's cost-innovation advantage

2. Adapt to an EV market that is expanding more slowly than expected

The company must therefore rethink how it creates value, not just how it builds cars.

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"When a new river carves its path, the old banks must reshape themselves." ~ KoRe proverb

 		 

Disruptors and Disrupted: Inside‑Out and Outside‑In Strategies and Business Models

 
   

③ The Core of the New Business Model

"A house built for yesterday cannot shelter tomorrow." ~ KoRe proverb

Volkswagen's new model is built on structural transformation rather than incremental optimization.

Key pillars include:

→ New revenue streams beyond traditional sales

→ Software, digital services, mobility solutions, and lifecycle monetization become central.

→ Radical cost optimization

→ Lower production costs without compromising consumer appeal.

→ Significant reduction in administrative overhead.

→ Leaner structures, fewer layers, faster decisions.

→ Higher efficiency in assembly plants.

→ Standardization, automation, and platform consolidation.

→ Acceleration of technology development.

→ Faster cycles, fewer platforms, more focused innovation.

This is a shift from a manufacturing‑centric model to
a value‑creation ecosystem.

 

  

 

 
   

④ Operational Changes: Fewer Models, Fewer Platforms

"A tree grows stronger when it sheds the branches that no longer bear fruit." ~ KoRe proverb

Volkswagen decided to reduce its model range and consolidate technology platforms.

This means:

→ Some models and modifications will be discontinued;

→ Platform diversity will shrink;

→ Development resources will be concentrated on fewer, more competitive products.

This simplification aims to cut costs, accelerate development, and improve profitability. It also aligns Volkswagen with the industry trend: fewer platforms, more scale, faster iteration.

 

  

 

 
   

⑤ The Cultural and Organizational Challenge

"A company changes only when its people choose to change with it."
~ KoRe proverb

 

  

 
MegaChange example: Volkswagen reinvents its business model  

The most difficult part of Volkswagen's transformation is not technical - it is cultural.

The company must shift from:

→ slow to fast

→ complex to simple

→ hierarchical to agile

→ engineering‑driven to customer‑driven

→ product‑centric to ecosystem‑centric

This Mega Change requires new leadership behaviors, new incentives, and a new mindset across the organization. Reinvention at this scale demands entrepreneurial courage, strategic clarity, and flexible consistency.

  

 
   

Additionally, leveraging AI for exponential growth is to result in smarter value creation, better market intelligence, stronger value proposition... More

 

  

 

 

 
   

Conclusions

"The future belongs to those who rebuild themselves before the world forces them to." ~ KoRe proverb

Volkswagen Group is not merely adjusting its strategy – it is rewriting its business model to survive and thrive in a world reshaped by Chinese innovation, shifting consumer expectations, and the realities of the EV market.

 

  

 
 

The transformation will be difficult, but it is necessary.

If executed well, it may become a blueprint for how legacy automakers reinvent themselves in the 21st century.

   KoRe proverb: Break a barrier, and a new world begins