Volkswagen is preparing for stiffer rivalry in China amid signs that the world's largest car market could contract for the first time since 2018, the chief executive of its China operations said in remarks published on Wednesday.
Ralf Brandstaetter, CEO of Volkswagen Group China, told the FAZ newspaper that a drop in the Chinese market "cannot be ruled out". He described a projection from the China Passenger Car Association that the passenger car market will be flat in 2026 - following 24 million sales in 2025 - as the "best-case scenario."
Brandstaetter also signaled a more conservative long-term view for global auto sales, saying Volkswagen now expects to sell 26 million cars a year by 2030, down from an earlier forecast of 28 million. The revised target reflects the group's assessment of market conditions going forward.
The German automaker is engaged in a campaign to hold onto its position as the leading foreign brand in China. It plans to introduce numerous electric and hybrid models in the coming years through collaborations with local partners, a strategy aimed at countering domestic competitors.
Brandstaetter noted that Chinese domestic brands have eroded Volkswagen's long-standing dominance in the market. He said the company regained the top spot among foreign automakers in the first quarter, a development he linked to the end of Chinese government EV subsidies that had benefited rivals such as BYD.
At the same time, Brandstaetter cautioned that the era of "super-profits" is over. "But we certainly won’t be returning to the super-profits of years past," he said, adding that competition in China is now "far too fierce for that."
The comments outline a cautious tone from a company that is simultaneously investing in new electrified models and recalibrating revenue expectations amid shifting subsidy policies and intensifying local competition.
Summary
- The head of Volkswagen Group China warned that the Chinese passenger car market could decline for the first time since 2018 and described a flat 2026 as a best-case scenario.
- Volkswagen trimmed its long-term global sales target to 26 million vehicles by 2030, down from 28 million.
- The company is rolling out numerous electric and hybrid models with local partners to defend its position, but noted that domestic brands have taken market share and profits will be more constrained.