Volkswagen (VW) is relocating production of its iconic Golf and Golf Estate models from Wolfsburg, Germany, to Puebla, Mexico, starting in 2027. This significant move is part of VW’s broader strategy to reduce costs and optimize production capacity. This shift marks the end of a 50-year era for Golf production in Wolfsburg and signals a new chapter for Vw Mexico.
Restructuring for a Competitive Future
VW’s decision to move Golf production to Mexico follows extensive negotiations with its Works Council and the IG Metall union. The resulting “Zukunft Volkswagen” (Future Volkswagen) agreement aims to streamline operations and address structural challenges within the company. This agreement includes a reduction of 35,000 jobs by 2030 and a decrease in production capacity by 734,000 units. These measures are projected to save VW over €15 billion annually.
VW Golf Wolfsburg
The VW Golf’s five-decade production run in Wolfsburg will end in 2027.
The relocation of Golf production to VW Mexico is a key component of this restructuring plan. By shifting production to a lower-cost location, VW aims to improve its competitiveness in the global automotive market. This strategic decision comes as VW faces pressure from rising costs in Germany and increasing competition from other automakers. VW CEO Thomas Schäfer noted that German factory costs are currently 25% to 50% higher than planned, making them twice as expensive as competitors’ facilities.
VW Mexico: The New Home of the Golf
The Puebla plant in Mexico is already a significant production hub for VW. Adding the Golf and Golf Estate to its portfolio will further solidify VW Mexico’s role within the company’s global manufacturing network. This move is expected to increase finished vehicle imports from Mexico to Europe, as the Golf remains a popular choice among European consumers. Despite declining overall car sales in Europe, the Golf saw a sales increase of 17.5% in the year leading up to October 2024, with nearly 200,000 units sold.
Wolfsburg’s Electric Future
While Golf production departs, Wolfsburg will remain a vital center for VW, focusing on electric vehicle (EV) production. The plant will transition to two assembly lines instead of four, producing the ID.3 and Cupra Born models. An electric version of the Golf is also planned for production in Wolfsburg by the end of the decade, along with another unnamed EV model.
VW Golf Wolfsburg
Wolfsburg will shift its focus to electric vehicle production, including the ID.3.
Realigning German Production
Beyond Wolfsburg, VW is evaluating the future of its plants in Dresden and Osnabrück. Production at Dresden’s Transparent Factory will cease in 2025, with VW exploring alternative options for the site. The Osnabrück plant, currently producing the T-Roc Cabrio, will continue operations until mid-2027. Meanwhile, the Emden plant will focus on the ID.4, ID.7 Tourer, and saloon models, while Zwickau will produce the Audi Q4 e-tron and Q4 e-tron Sportback. These changes underscore VW’s commitment to streamlining its German operations for long-term sustainability.
Focusing on Core Competencies
VW Group Components, the company’s parts manufacturing division, will concentrate on core components, aiming for €3 billion in savings by 2030. While maintaining its existing sites, the division will implement new working time models to enhance production flexibility. This focus on core components may lead to increased procurement of other parts from external suppliers. VW’s Hanover plant will continue to produce the ID. Buzz and the Multivan, implementing cost-reduction measures to facilitate investment in future products. These strategic shifts aim to position VW as a technologically leading volume manufacturer by 2030. The relocation of Golf production to VW Mexico represents a significant step in this ongoing transformation.
