Volkswagen opens first industrial dismantling line as part of circular economy strategy

Volkwagen recently opened its first industrial dismantling line at its Zwickau plant in Saxony, Germany. The line has eight work cycles and will initially process pre-production vehicles, with plans to refurbish and recover raw materials from end-of-life vehicles in the future.

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At ALSC Global 2026, Volkswagen Group of America’s Anu Goel discussed the pressures reshaping service parts and finished vehicle logistics, from tariffs and rising costs to electrification, ageing vehicles and the need for greater supply chain flexibility.

The automaker announced in January that it would be investing in the systematic disassembly of vehicles at the Zwickau site to recover valuable raw materials and reuse components.

With the dismantling line now open, Volkwagen is working towards disassembling an annual total of 4,100 vehicles in two shifts from 2027. A modular dismantling concept will then allow capacity to be gradually increased to 15,000 vehicles per year by 2030.

Thomas Schäfer, Volkswagen board member and CEO of the Volkswagen brand, said cars will be dissembled "with the same industrial precision" that they are assembled in Zwickau, noting that the addition of this line is an opportunity to add value and a key step in advancing circular economy principles across the entire Volkswagen Group.

"By industrially dismantling end-of-life vehicles, we offer our customers high-quality used parts in aftersales," said Marcus Edelmann, spokesman for Volkswagen Group's board of management. "Instead of scrapping components, we reuse them."

Edelmann added this "timely product offering" further reduces total economic losses and contributes to Volkswagen's broader sustainability strategy and while helping to strengthen customer loyalty.

Encouraging a more circular economy

With the investment in the site, Volkswagen's Zwickau vehicle plant is set to become the company's centre of excellence for the circular economy, developing processes and standards that could be applied at other sites worldwide.

The dismantling line will support Volkswagen’s efforts to reduce its reliance on primary raw materials and develop new revenue streams from used components, recovered materials and vehicle refurbishment. The group’s ‘Reduce & Grow’ strategy aims to lower emissions and primary raw material consumption while creating new opportunities for value generation and supply chain resilience.

Volkswagen also plans to establish a European network of circular economy partners to expand these activities while optimising logistics costs. The Zwickau project will initially be used to define, test and validate dismantling processes, with recovered components returned to circulation following appropriate testing and processing.

Read more: EU End-of-Life Vehicles Regulation enters into force

The European Union's End-of-Life Vehicles Regulation (ELVR) entered into force on 13 August 2026, aiming to strengthen circularity in the EU automotive sector.

Andreas Walingen, head of Volkswagen Group circular economy, said that the circular economy is "transforming from a sustainability concept into an industrial business model". He shared his view that successful implementation of circular economy principles will depend on three things: "speed, scaling with industrial processes and partners, and innovations for competitiveness".

The Zwickau dismantling line was completed, including the necessary approval process, three months ahead of schedule. "This turns strategy into an industrial reality," Walingen said.

Another motivating factor behind the transformation of Zwickau into a centre of excellence for the circular economy is regulatory compliance. The European Union's End-of-Life Vehicles Regulation (ELVR), which entered into force on 13 August this year, will require a minimum of 15% recycled plastic content in new vehicles from 2032. This minimum requirement will rise to 25% by 2036.

With regulations mandating more circular practises in the automotive industry over the next decade, automakers will need to start preparing now to ensure their processes allow for the collection, dismantling and recycling or reuse of materials from end-of-life vehicles. Volkswagen said recovered plastics from a single end-of-life vehicle could eventually provide enough material to manufacture three new cars. 

Volkswagen employment and investment

The decision to develop circular economy activities at Zwickau was agreed during collective bargaining negotiations in December 2024. Volkswagen described the new business area as a second pillar alongside vehicle production, intended to help secure employment and build expertise in central Germany.

100 employees have already been retrained and are due to work on the dismantling operation from 2027. Volkswagen said the wider circular economy business area could eventually employ up to 1,000 people.

The investment will also support training and the development of expertise in dismantling, refurbishment and materials recovery. Working with the Volkswagen Education Institute and the West Saxon University of Applied Sciences, the OEM plans to incorporate circular economy skills into existing training and university courses, helping prepare employees for future operations at other sites.

However, the investment comes as Volkswagen undertakes a wider restructuring programme, with the future of vehicle production at Zwickau still uncertain. Under the group's 'Future Plan 2030', which has been unanimously approved by Volkswagen Group's supervisory board, a competitive future production allocation cannot currently be guaranteed for the Zwickau plant, nor can it at three of Volkswagen's other plants in Germany: Emden, Hanover and Neckarsulm. The uncertainty extends across the period from 2031 to 2034, with Volkswagen due to develop a concept for a competitive European production structure by the end of June 2027.

The plan also referenced "consistent alignment of global workforce capacity with economic reality beyond existing programmes" and outlined plans for a group-wide workforce adjustment that would see the elimination of approximately 50,000 positions, including management roles, by 2030.

The plan also identified the need for a group-wide workforce adjustment of approximately 50,000 positions, including management roles, beyond existing programmes. Volkswagen Group has said that this adjustment is necessary for it to achieve its transformation targets and safeguard its competitiveness against a backdrop of intensifying global competition, shifting demand and technological change in the automotive industry.