The car business in China is challenged. The car business in Europe isn't doing well. The U.S. remains a haven, just as long as Chinese cars don't arrive.

Thursday, Volkswagen, the second-largest car maker in the world behind Toyota Motor, announced a sweeping restructuring that could cost up to 100,000 jobs. (More than 600,000 people work at Volkswagen.)

The changes, including model reductions of up to 50%, are designed to enhance competitiveness in an increasingly competitive world.

"By 2030, we will make the Volkswagen Group the most attractive automotive company in the world -- with iconic brands, inspiring products, leading technologies, robust financial results, reliable capital market performance and a team spirit in action," said CEO Oliver Blume in a news release. "With our future plan, we are now entering the next phase of transformation."

It's a bold plan built out of necessity. Industry profitability in China and Europe is falling amid too much capacity and rising Chinese imports into Europe.

European carmakers BMW and Mercedes-Benz Group, for instance, are expected to make less money in 2026 than in 2025. Profits at General Motors and Ford Motor are expected to be up.

The U.S. market remains relatively unaffected by foreign problems, with high tariffs essentially locking out Chinese cars. President Trump has said Chinese cars are welcome if they build local capacity -- which essentially nullifies any advantage from using lower-cost Chinese labor to assemble cars overseas.

That's good news for shares of GM and Ford, which do most of their business in the U.S. Those stocks trade for about six and eight times earnings expected over the coming 12 months. To be sure, those are low multiples, but in line with history.

Volkswagen shares trade at closer to three times earnings, down from closer to five times at the start of the year.

Auto stocks don't get big multiples because earnings are cyclical and growth is a challenge. Still, three times shows just how little confidence investors have in future profitability.

Volkswagen stock was down 0.8% in overseas trading on Friday. That might seem like a small move given the ambition. But the path forward won't be easy. Through Friday trading, Volkswagen stock was down about 32% year to date.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 10, 2026 13:56 ET (17:56 GMT)

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