Tough times ahead? Volkswagen Group to 're-focus' in 2025 with VW, Cupra and Skoda leaning into their strengths to attract buyers with refreshed range of electric cars, plug-in hybrids and combustion models

Off the back of a slew of new-generation product launches under the Volkswagen, Cupra, and Skoda brands, VW Group has detailed its strategy for next year.

Each of the VW Group's brands will lean into the strengths of each line-up to maximise its appeal in a more challenging new car market.

Major changes to the brand’s local offerings include Volkswagen finally introducing its range of electric vehicles, while also killing off its long-running Passat and removing the Golf station wagon.

Skoda will lead the charge on the larger sedan and wagon front with the Octavia and Superb ranges, while Cupra will take up the slack on the performance small wagon front with a hot 245kW/420Nm version of its Leon wagon as a spiritual successor to the Golf R.

When asked if this decreased overlap between each VW Group marque was something we might see more of in the future, the group’s Australian Communications Manager Daniel DeGasperi said: “I wouldn’t necessarily say less overlap. When a brand introduces an entirely new EV family, you need to consider what your buyer profile is now more than ever.

“It’s the perfect time to re-focus on which cars in each showroom need to be focused on. Skoda, for example, has a very loyalist fanbase when it comes to wagons — the vast majority of Superb and Octavia sales are wagons.

“With VW now having ID.4, ID.5, and ID.Buzz coming, it is also important to recognise that as a mainstream volume brand like Volkswagen, the wagon segment was better served by other brands. It’s the same story with Cupra and its SportsTourer.”

However, with Cupra aiming for a more high-end performance-focused buyer with its Terramar mid-sizer, could there be strife for Volkswagen’s highest-seller, the Tiguan? The answer is no, according to DeGasperi, who says the third-generation Tiguan set to arrive in 2025 will reposition itself, thanks to an increase in standard equipment on more basic versions.

“With Tiguan, we know exactly who the buyer is, but we want to expand on that — particularly at the lower end. We think we can directly take on rival SUVs with a really compelling offer at the entry level with high equipment and technology, but with the 110TSI engine.”

While Volkswagen and Skoda reposition, they're leaving plug-in hybrids (PHEVs) out of the equation, at least for now. New-generation PHEVs will arrive only under Cupra initially.

When asked why this was the case given Volkswagen’s volume aspirations, DeGasperi said it was a matter of volume and supply.

“With Cupra, we can do mild hybrids (consisting of a 1.5-litre 110TSI engine as opposed to the non-hybrid 1.4-litre 110TSI engine which arrives in VW and Skoda products) and plug-in hybrids because we don’t plan for the same volumes as we do with Volkswagen — this means we can have a more aggressive powertrain scale. It’s the same case with the (195TSI) Leon SportsTourer - with Cupra, these are niches we can really explore.”

In 2025, Cupra will launch facelifted versions of the Leon hatch and wagon, Formentor crossover, new variants of its Born electric hatchback, as well as the new Terramar spotrty mid-size SUV in a brand-wide refresh it hopes will reverse a nearly 30 per cent sales slide in 2024.

Cupra will continue to have exclusive rein over the plug-in hybrid powertrains in the group for the Leon, Formentor, and Terramar, with Volkswagen focused on battery electric vehicles (BEV) to comply with Australia’s new vehicle emissions standards in the short term.

“In that [mid-size SUV] segment we’re happy with the mix of [combustion] powertrains for Tiguan and having ID.4 as a BEV” said DeGasperi, “Over 50 per cent of Tiguan sales are for the top-spec 162TSI and R - those buyers will be able to compare those with an ID.4 Pro or ID.5 GTX at a similar price-point, where a lot of our competitors are asking their customers to step up in price.”

After years of delays, VW’s ID.4 and ID.5 are set to land in Australia before the end of 2024, with the new third-generation Tiguan arriving in early 2025.

Volkswagen Group is facing an existential crisis overseas where its massive investments in electric vehicles are proving not enough to recover lost sales during the pandemic. The brand is looking to close factories in Germany for the first time in its 87-year history due to production not meeting capacity and electric vehicle sales sliding by nearly 70 per cent in its home market of Germany.

Locally, the group’s brands will face increased competition from new Chinese players, particularly on the EV front, although the semi-premium positioning of Cupra and VW in should keep it at least somewhat protected from the big sales potential of Chinese cut-price combustion vehicles.

It’s not all smooth sailing for the brand though, with its range of electric vehicles arriving just in time to face new mid-market Chinese rivals like Xpeng and Zeekr in 2025. The good news, at very least, is it seems the brand will now have to rely on export markets more and it is likely production slots of important models will be more available to the Australian division.