VOLKSWAGEN aims to keep its market share in China roughly stable until the end of the decade, the head of its China business said, betting heavy investment there will support sales despite a raging price war with local electric vehicle (EV) rivals.
The targets for 2030, including Volkswagen’s ambition to take a share of around 15 per cent of the Chinese car market in 2030 compared with 14.5 per cent last year, underscores the challenges Europe’s top carmaker faces in the world’s biggest auto market.
“Today, prices are going faster down than the cost improvements,” Volkswagen management board member Ralf Brandstaetter and head of the carmaker’s China business, said on Wednesday (Apr 24).
“We expect in the next years, the next two years especially, that this price war will continue,” he told analysts during a capital markets event around its China business, adding that would put pressure on profits.
Volkswagen ceded its title of best-selling car brand in China to Chinese EV giant BYD in late 2022, and the group’s market share in China fell to 14.5 per cent last year from 19.3 per cent in 2020 as combustion-engine sales declined.
Brandstaetter cited investments in a new Chinese research hub and partnerships with Chinese EV makers and suppliers to develop more affordable EVs, more quickly.
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“We want to be the number one international OEM (original equipment manufacturer) in China in 2030 with 15 per cent market share,” he said.
That target would correspond to selling around 4 million cars in China annually by 2030, up from 3.07 million last year, Volkswagen said.
Volkswagen is also targeting proportionate operating profit of more than US$2.14 billion in China in 2027 and around 3 billion euros (S$4.36 billion) by 2030, up from 2.6 billion euros last year.
Volkswagen CEO Oliver Blume said earlier this month the group “cannot keep up at the top of the table at the moment” in China’s fast-growing EV market, adding a market share of more than 10 per cent would be “very respectable” given fierce competition.
China has undergone a big shift from the combustion-engine age when foreign-made cars, especially those from Germany and Japan, were seen as the pinnacle of global engineering, to the electric age that has seen their Chinese counterparts move much faster on developing EV technology.
Among the incumbent foreign carmakers, Volkswagen has arguably mounted the biggest fight to stay competitive against the likes of BYD and US carmaker Tesla, including participating in a bruising price war that started last year and has since drawn in more than 40 brands.
Volkswagen’s ID.3 became one of the best-selling EVs in China after the carmaker slashed the price by just over US$5,100.
With its current offerings priced above that of many Chinese electric-only rivals, the German carmaker is pushing to expand its product range in China to attract customers in the entry- and mid-level segment of EVs.
“The price war has victims and we don’t want to be a victim,” Matthias Glodny, Volkswagen Group China’s vice president for products, told reporters at the Tuesday briefing.
“We’re feeling it’s not a sustainable way to continue, but of course we are fighting back.” REUTERS