Volkswagen is bracing for tougher competition in China as the world’s largest vehicle market faces the possibility of contraction - a scenario the company’s China chief said cannot be dismissed.
Ralf Brandstaetter, CEO of Volkswagen Group China, told the FAZ newspaper that a decline in the market is possible. He framed the China Passenger Car Association's projection of a flat passenger car market in 2026 - coming after estimated sales of 24 million vehicles in 2025 - as a best-case scenario.
In response to changing expectations, Volkswagen has adjusted its long-range outlook for China. The company now anticipates annual sales of 26 million cars in the Chinese market by 2030, down from a previously stated target of 28 million cars.
To defend its position, Volkswagen is increasing the rollout of new electric and hybrid models in cooperation with local firms. The automaker is attempting to hold on to its place as the top-selling foreign brand amid a market environment in which domestic manufacturers have eroded Volkswagen's long-standing leadership.
Brandstaetter noted that Volkswagen briefly reclaimed the top spot in the first quarter after the Chinese government ended certain EV subsidies, a change that affected competing automakers including BYD.
"We certainly won’t be returning to the super-profits of years past," Brandstaetter said. "Those days are over. Competition in China is now far too fierce for that."
The comments underline Volkswagen's view that structural change in China’s auto market is enduring. The company is shifting resources toward electrified portfolios and local partnerships as it confronts stronger rivals at home.
Context and implications
- Volkswagen's revised 2030 sales target reflects reduced confidence in long-term market expansion in China.
- Accelerated product launches with local partners are a strategic response to intensifying competition and the rise of domestic brands.
- Recent policy moves, such as the end of some EV subsidies, have reshuffled market positions and briefly benefited Volkswagen in quarterly rankings.