When the Factories Go Silent
What VW’s crisis in Saxony signals to Swiss business leaders about business model fragility
In October 2025, a prominent German newspaper ran a stark headline: “Saxony trembles at the future of its Volkswagen plants.” (FAZ.NET)
This was no local muttering — it was a vivid signal that the industrial backbone of Volkswagen is under strain. In Zwickau, the electric vehicle production lines stood idle, and the factories built to be symbols of the future now groaned under low utilization. (FAZ.NET)
For Swiss business leaders, that image should give pause. What happens when your flagship plants — the very proof points of your brand’s promise — begin to run empty? When the industrial engine that once drove your business becomes a financial anchor?
This is not just VW’s story. It may be yours or a company you lead.
The Saxony Warning: Plants idle, demand missing
In Zwickau, a city once heralded as a showcase for VW’s EV ambitions, the lines now run at half capacity. The factory designed to build hundreds of thousands of vehicles now sees sharply reduced throughput. (FAZ.NET)
Saxony’s state governor and Germany’s federal environment minister visited the facility, publicly pledging support for jobs and retooling. (FAZ.NET) But political reassurance can’t manufacture demand.
Volkswagen’s own statements hint at internal uncertainty: plans to shift ID.4 production, keeping ID.3 longer in Zwickau, possible reallocation of components — all signs of reactive moves rather than confident strategy. (FAZ.NET)
The factories are warning beacons: physical assets built for scale, now underutilized, becoming cost burdens instead of value drivers.
People don’t buy a car. They hire a smartphone on wheels — something that reliably transports them from A to B, with all the gadgets they use daily.
Switzerland: VW’s brand hemorrhage
While VW’s factories stutter in Germany, in Switzerland the challenge shows up in brand erosion. Swiss media reports a sharp drop in VW registrations, signaling a deeper fracture between brand promise and consumer demand in the “middle” segment.
In contrast, sister brands like Audi, Škoda, and Cupra in Switzerland remain relatively stable. That suggests the problem is not the corporate umbrella — it is Volkswagen the brand.
The mid-market buyer — the person who used to choose a Golf or Passat — now sees better alternatives:
EV-native brands offering more tech for less cost
New value propositions outside the legacy auto complex
In short: VW in Switzerland is losing relevance. The middle bracket is vanishing.
The business model collision
What the Saxony factories and Swiss sales stats expose is not a product error — it’s a business model mismatch.
Volkswagen’s original design rested on:
Scale-driven volume
Platform sharing and standardized components
Extensive dealer networks
Incremental engineering improvements
But today’s market rewards a different DNA:
Software, not just hardware
Speed, not just scale
Direct-to-customer models, not traditional dealer layers
Subscription, service and experience revenue, not just one-time sales
VW is being asked to do two conflicting things:
Maintain heavy plants and legacy cost structures
Shift fast into software, EV, and service models
The factories idle in Saxony are proof that the old logic is buckling under new market dynamics.
When your brand says ‘Volk’ (people) but demand is shrinking, you face a choice: change the brand or build products people actually want.
Why the middle market is disappearing
The crisis in VW’s core segment comes from three converging forces:
Margin compression and high transformation cost
EV investments, regulatory compliance, battery R&D — each is expensive. In a segment where margins were already tight, those costs become intolerable.Upward shift to premium and downward pressure to value EVs
Many consumers with means opt for premium brands. Others with tech orientation but limited budgets shift “over the fence” to BYD, Tesla, MG, Hyundai/Kia EVs — which often offer superior digital experience at better price points.Asset-heavy business logic vs. a digital-first market
VW’s factories, legacy logistics, dealership layers — all weigh down responsiveness. EV-native brands started with lighter architectures and digital-first approaches, giving them advantage in cost, agility, and consumer appeal.
Lessons for Swiss business leaders
The VW crisis offers few deliverables — but many warnings applicable far beyond autos.
1. Even the strongest brand can’t outlast a broken model
VW’s brand carries heritage, recognition, trust. But when actual value delivery diverges, brand equity erodes.
2. Idle capacity is a cancer, not a buffer
Factories built for volume become liability when volume shifts. Every underused asset leaks value and flexibility.
3. Middle positions vanish when market logic changes
If your business is not clearly premium or clearly cost-efficient, you risk being squeezed from both ends.
4. Business model transformation must precede product transformation
Upgrading to EVs or digital features is necessary — but insufficient. The underlying logic of value capture must shift too.
5. Act before your balance sheet screams
By the time financials falter, the future slot in your market might already be taken.
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Swiss leaders: Don’t let this be your story
Whether you lead a manufacturing company, service firm, or tech venture in Switzerland, there are echoes of VW’s dilemma in many sectors:
Local banks losing middle segments to fintech challengers
Retail chains seeing mid-tier customers vanish between discount online and luxury boutique
Industrial firms trying to layer services over outdated cost structures
VW’s crisis is a micro-case of what happens when market definition moves but business logic doesn’t.
Your move: see it before it’s too late
If you sense your organization is nearing its own moment of disruption — where volume collapses, growth stalls, and the margin center erodes — then the time is now to rewire.
I help executive teams:
Diagnose where their current business model is leaking relevance
Re-design value delivery, capture, and architecture aligned with shifting market logic
Execute transformation with clarity, speed, and resilience
👉 Book a strategy session today and safeguard your company’s next decade.
Let’s make sure “when the factories go silent” is never your headline.