Can Volkswagen restore its ranking?
Volkswagen, once a major foreign automaker in China, is working to keep pace in the country’s rapidly growing electric vehicle (EV) market. To capture back market share, the German automaker and its joint venture partner, FAW Group, announced plans to launch 11 new models tailored to Chinese consumers. The lineup includes six electric vehicles, two plug-in hybrids and two range-expanded electric vehicles, marking the importance of Volkswagen in an increasingly technology-driven market.
Losing domestic electric vehicle manufacturers
For decades, Volkswagen has enjoyed iron grip in the Chinese market, with everything from budget-friendly sedans to luxury Audis for sale. But the rise of local automakers like Byd has ruined the status quo. Chinese consumers, who once regarded Volkswagen as a symbol of quality and prestige, are now leaning towards local brands that offer cutting-edge EV technology at competitive prices.
Byd Dolphinbyd
One of Volkswagen’s biggest obstacles is the China-backed EV sector. Companies like Bied benefit from government subsidies, allowing them to sell electric vehicles at significantly reduced prices. Volkswagen is reluctant to cut prices at the same rate and has seen its market share erosion. The company’s global delivery fell last year, including a 9.5% downturn in China, with economic headwinds and fierce competition reshaping the landscape.
Technology-centered Chinese-specific model
To offset these losses, Volkswagen’s China strategy is doubling. The upcoming model will feature high-performance digital features including autonomous driving capabilities and over-the-air software updates – what Chinese consumers expect from electric vehicles.
XPENG G6XPENG
In addition, Volkswagen has been working with Chinese electric car manufacturer Xpeng to accelerate its transition to electrification. The automaker also focuses on hybrid and extended range vehicles, which remain popular in China due to concerns about infrastructure charges.
Can Volkswagen participate in the electric vehicle price war?
Despite these efforts, Volkswagen faces a difficult road. The company adapts to China’s shift in demand for hybrid and electric vehicles, allowing competitors to capture market share. Meanwhile, a constant price war – driven by active discounts from Bied and other Chinese manufacturers, Volkswagen’s competition has become even more difficult.
Volkswagen ID.1 ConceptVolkswagen
The automaker aims to sell 4 million cars in China each year by 2030, and plans to launch about 40 new models between 2025 and 2027. However, the success of the strategy will depend on whether Volkswagen can convince Chinese consumers that its electric cars are not only competitive, but also superior to homemade alternatives.
The final thought
The dominance of the masses in China is no longer guaranteed. The company’s latest push is focused on new models and advanced technology, an ambitious attempt. But as domestic electric car manufacturers grow rapidly, Volkswagen must act faster and innovate more actively if it wants to regain its position in the world’s largest auto market.
