Following Beetle’s lead, VW may move Golf production to Mexico

Mexico has lower labor costs than Germany and is more suitable for compact hatchbacks with lower profits than SUVs

For decades, the Beetle was the world’s most popular new Volkswagen, but when European and American buyers turned their attention to the more modern Golf, Volkswagen cut production in Germany and exported the Mexican-made Bug to these markets. Now, almost 50 years later, golf may be experiencing a similar exodus from its home country to Mexico in response to its waning popularity.

A report in Germany’s Handelsblatt newspaper said Volkswagen is looking to move Golf production from Germany to Mexico, where it already has a factory. Another option closer to home is also being considered: Poland.

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Although the Golf is one of Volkswagen’s biggest icons, and the company’s marketing department is putting on a big song and dance for the model’s 50th anniversary in 2024, it’s no longer the force it once was. The Golf has been Europe’s best-selling car for many years, but despite its current resurgence, the hatchback has been outperformed by several other cars over a number of seasons, including the Dacia Sandero and Volkswagen’s own T-Roc SUV.

The problem with the Golf is that VW SUVs enjoy higher margins than simple hatchbacks (and station wagons), and the problem is compounded by higher labor costs for production in Germany. At a time when every penny counts, moving golf production abroad could save VW cash.

But which Golf? Sources at Handelsblatt say Volkswagen’s new compact electric car, tentatively called the ID.Golf, will be launched in 2028, will be built around a new front-wheel drive electric platform and will be built at Wolfsburg’s flagship plant The first electric car. But R&D chief Kai Grüntz told Top Gear NL that today’s Mk8.5 combustion Golf is expected to sit alongside compact electric cars for many years, possibly even as late as 2035. It is this model that will be moved to a less expensive construction site.

If President Trump insists on imposing a 20% import tariff on cars entering the United States from south of the border, producing Golfs in Mexico could cause problems for U.S. exports. VW may move production of some Mexican-made models to U.S. plants, but Golf is unlikely to guarantee that investment. The automaker only offers GTI and R versions in the United States, and Marklines says it sells 11,000 units a year, accounting for just 3 percent of global Golf production.

According to the same report, VW’s supervisory board was due to discuss the future of the Golf’s Wolfsburg plant and other plants in November, but that was postponed due to strike action and negotiations with the works council.