Volkswagen Group is investing another 2.5 billion euros in China

Wolfsburg/Hefei. The Volkswagen Group has been operating in China for 40 years. Today, the Volkswagen network in China includes 39 plants, 90,000 employees and nearly 50 million customers who drive cars from the group’s brand. However, the group is under pressure in China, especially when it comes to e-mobility. The group counters this with a China-to-China strategy to be fast. And now it announces the next major investment of 2.5 billion euros.

Another 2.5 billion euros will go to Hefei

Volkswagen will use the money to further expand its production and innovation center in Hefei with a total investment of 2.5 billion euros. In addition to expanding R&D capacity, production is also being prepared for two Volkswagen brand models, which are currently being developed together with Chinese partner Xpeng. Production of the first model, an SUV in the mid-range segment, is scheduled to begin in 2026. “Additional models accelerate the electrification of the Volkswagen Group’s model portfolio in China and expand the market,” said a press release from China Volkswagen Group. From 2030 onwards, more than 30 electric models from all the Group’s brands will be released in China, the world’s largest car market.

The main unit to customize the products is Volkswagen China Technology Company (VCTC) headquartered in Hefei. It takes on major development tasks – in close cooperation and joint ventures – and is also developing China’s first dedicated electric architecture, the China Central Platform (CMP), which at least four additional models of the entry-level electric segment in the class The compact will be created from 2026.

50 million drives a VW Group model in China

“Today, almost 50 million customers in the region operate the Group’s product. The basis of this success is the cooperation with our strong joint venture partners SAIC and FAW. Together we will now accelerate the transition towards smart electric mobility,” says Ralf Brandstätter, Member of the Board of Management of Volkswagen AG of China. With the “In-China-for-China” strategy, there is a solid plan and at the same time we are accelerating the restructuring of our business.

According to Brandstätter, the goal is more customer focus, more speed and more internal development. “The new production and development center in Hefei will bring the technology to market maturity almost 30 percent faster in the future. The additional investment in this area underlines our ambition to rapidly expand our internal innovative strength,” says the Board of Directors of the Group. China. Cars should be made according to the wishes of Chinese customers. The Wolfsburg-based group is also building partnerships with Chinese high-tech companies Horizon Robotics (autonomous driving tasks), Thundersoft (infotainment) and ARK (user experience).

Looking for a new successful model

One goal is definitely to bring a good model like Santana or Jetta back to the market. The new vendor will undoubtedly be completely electric. Santana and Jetta were the entry point in personal mobility for millions of customers in China. Later, the first Chinese-specific models such as Lavida and Sagitar were added, which became million sellers and are still successful in the market today.

The basis of the necessary changes is the strong market position of the Volkswagen Group in China. The group continues to be the open market leader in China when it comes to new registrations, and still holds the top position when it comes to vehicle inventory. Today, almost 50 million customers drive cars from the Group’s brands. But competition is fierce in the very strong market for fully electric cars and the Wolfsburg-based company faces strong Chinese competition from the likes of BYD.

There are 39 plants in China

The Volkswagen Group needs to be fast, especially when it comes to programming and development times. “Over the past four decades, the Volkswagen Group, together with its long-term Chinese partners SAIC and FAW, has positioned its strategy precisely according to the needs of Chinese customers,” says the press release.

The Volkswagen Group currently produces in 39 plants and is therefore an important part of the country’s industrial ecosystem. 90,000 employees work for the group in China. This makes Volkswagen the largest European employer in China. The works also include a controversial plant in the Urumqi area. Importantly, plants are joint ventures with partner companies.

AZ/WAZ