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Volkswagen Mexico cancels one of three production shifts at Puebla plant to offset high U.S. tariffs and market volatility.

Volkswagen Mexico has announced the indefinite cancellation of one of its three production shifts at the Cuautlancingo plant in Puebla. This move follows a drastic drop in exports for the Jetta and Tiguan models, pressured by the 27.5% tariffs imposed by Donald Trump. The production adjustment will result in the loss of 786 jobs, including 611 layoffs of personnel with less seniority and 175 positions filled through a voluntary retirement scheme. Oliver Blume, CEO of the Volkswagen Group, stated that exporting many vehicles from Mexico to the United States is no longer economically viable under current tariff levels. The company aims to reduce its global vehicle catalog by 50% by 2030 to improve profitability. Meanwhile, the U.S. auto market faces a 2.3% cumulative decline in July 2026, driven by high prices and reduced demand for electric vehicles. Despite the production cut, the company recently concluded contract negotiations with the Independent Workers Union of Automotive Industry Volkswagen of Mexico (SITIAVW), agreeing to a 10.04% global increase in the supply of salaries and benefits.

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