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Volkswagen has failed to gain ground in China from major rivals such as Tesla and BYD, despite spending 5 billion euros last year to defend its position in the world’s biggest car market.
The company, which also owns brands such as Audi and Porsche, said Tuesday that sales in China rose 1.6% last year. In comparison, the overall market growth rate reported by the China Passenger Vehicle Association was 5.6%.
In the important electric vehicle segment, VW recorded a growth of 23% compared to 36% for the overall EV market in China.
Ralf Brandstetter, VW’s China director, said the company maintains a “solid position despite the difficult market” and expects “the situation will continue.” he added. [to] The next two years will continue to be demanding. ”
VW and many established competitors in Europe, Japan and the United States are struggling to maintain their position in China’s auto market.
The market share of foreign brands in China has fallen to about 44% by December, from 64% in 2020, when Chinese consumers started buying more domestically produced EVs, according to Automobility, a Shanghai consulting firm.
“With the exception of Tesla, foreign brands performed poorly because they did not anticipate market changes.” [to EVs] and is rapidly losing relevance,” Bill Russo, former head of Chrysler China and founder of AutoMobility, said in a research note.
Beyond Tesla, which has tripled its sales in China since 2020, Shenzhen-based BYD has emerged as the biggest winner in China’s rapid EV uptake. The company, whose shareholders include Warren Buffett’s Berkshire Hathaway, sold a record 526,000 battery-only EVs in the fourth quarter, compared to Tesla’s 484,000. It has become the world’s largest manufacturer of battery-powered vehicles.
VW, Germany’s largest company and employer, was one of the first Western companies to start operations in China in the 1970s and now relies on China for at least half of its annual profits. Last year, the VW brand was dethroned as China’s best-selling car by BYD.
To protect its position in China, Volkswagen last year announced a 5 billion euro investment in the country and developed a “in China, for China” strategy to develop cars that particularly appeal to domestic consumers. Analysts are praising the company’s efforts as other automakers, including America’s Ford Group and South Korea’s Hyundai, fall further behind their Chinese rivals.
VW’s investments last year included plans to spend $700 million for a 5% stake in Guangzhou-based EV startup Xiaopeng.
The Chinese market for internal combustion engine vehicles, the segment in which VW sells most of its vehicles, shrank by 6% in 2023 from the previous year.
VW announced on Tuesday that global car shipments will reach 9.24 million units in 2023, a 12% increase from the previous year, but at the time the industry was still heavily impacted by supply chain bottlenecks for key components such as semiconductors. was receiving.
“Given the geopolitical and economic framework, this is a solid performance,” said Hildegard Waltmann, a member of VW’s enlarged executive board, adding that the group’s global electric vehicle sales account for a third The company added that the number of units sold increased by more than 700,000 units to 770,000 units.
The company’s position in China is further complicated by its factories in Xinjiang. China has been accused of widespread human rights abuses against Uyghurs and other Muslim groups in the region.
In December, Volkswagen announced that an audit of its Xinjiang plant conducted by German human rights consultancy Ronning and a Chinese law firm found no signs of forced labor.
All 20 Ronning employees, except for founder Markus Ronning and another executive, subsequently issued a statement on LinkedIn distancing themselves from the company’s findings.
Additional reporting by Gloria Lee in Hong Kong