Faced with Chinese manufacturers, Volkswagen wants to gain market share in China

“In China, for China”. In a press release published this Wednesday morning, the German Volkswagen group revealed its strategic plan to increase its sales in China, on the eve of the Beijing Motor Show. Unlike Mercedes, BMW or Audi who are protected by their brand image in the premium car segment, Volkswagen has been struggling for several years. For the first time in decades, the German brand was not the best-selling brand in China last year, ahead of electric giant BYD.

The main difficulty of the group is the rise of competing mid-sized brands in the electric sector such as BYD, GAC, Chang’an which are eating up the market share.

China: Volkswagen starts a price war with an electric car that costs around 20,000 euros

But the German group has no intention of giving up, even though China represents 40% of its annual sales. Volkswagen thus announced aims to save 40% on its production costs of electric vehicles in China by 2026 by achieving ” cost parity » for its entry-level models and those of local competition. And this, while an electric model that costs 20,000 euros should arrive on the Chinese market soon. The amount that can be achieved thanks to a common production platform for its different models and specific to China. Volkswagen is also the only German group to have several platforms and research centers in the former Middle Kingdom, due to its presence on the Chinese market for several decades.

“We have to design and produce in China,” he confirms Sébastien Amichi, partner and automotive specialist in Kearney, we must also know the expectations of Chinese consumers, which are very different depending on the region of the country. »

Volkswagen also announced last week to invest 2.5 billion d’euro over 2024-26 which will be allocated to the expansion of its production and innovation center in Hefei, the capital of Anhui province, with the intention of increasing its R&D capacity and financing the design of two structures. electricity for China.

15% target market share

A group of ten brands (Volkswagen, Audi, Porsche, Skoda, etc.) has set itself the goal of selling a total of 4 million cars per year in China by 2030, compared to 3 million last year, he also announced.

Electric cars: European manufacturers make deals with their Chinese rivals to better control them

With such a sales rate, Volkswagen would take a market share of 15% – the group is currently at 14% – in a market that should have more than 28 million vehicles sold per year in 2030, or about 6 million more than now. according to the German manufacturer. In addition, the low-end electric vehicle segment is expected to account for more than 50 percent of the Chinese market in the future, he estimates. To achieve its goal, the German group intends to maintain 5% growth per year.

But personal cars are not the only focus of Chinese manufacturers. They are currently trying to gain ground in utility vehicles, a source of profit for European manufacturers including Volkswagen, one of the market leaders. And the Beijing Motor Show should present its share of surprises from Chinese brands.