In 2024, Volkswagen’s deliveries in the Chinese market dropped by 10%, attributed to two main factors: the continuing economic slowdown in China and intense price competition. These challenges have had a profound impact on Volkswagen’s global performance.
The slowing economic growth in China is the primary reason for Volkswagen’s decline in sales. With weakening consumer confidence and rising costs of living, especially leading to a significant decrease in demand for high-end car models among affluent groups, the overall demand in the automotive market has shrunk. In 2024, Volkswagen’s high-end brand Porsche experienced a sharp 28% drop in sales in China, while Mercedes-Benz and BMW also faced sales difficulties.
This decline in demand not only affects traditional fuel vehicles but also extends to the electric vehicle market. Despite the rapid development of the electric vehicle industry in China, the growth in demand has been lower than expected, and the gradual phasing out of domestic subsidies has further intensified the pressure.
Intense price competition is another significant factor. With over 120 automotive manufacturers competing in the Chinese market, including domestic rivals like BYD, these companies receiving government subsidies have competitive pricing, forcing Volkswagen to engage in low-price competition, further squeezing profit margins.
Moreover, some of Volkswagen’s vehicle models in the Chinese market lack competitiveness, especially as consumers increasingly focus on intelligent and new energy vehicle models. The pace of product updates in China has not fully met market demands.
Volkswagen’s global sales data reflect its challenges in the Chinese market. In 2024, Volkswagen’s global deliveries decreased by 2.3% to 9.03 million vehicles, with the Chinese market showing the most significant decline. In its home market of Germany, Volkswagen’s sales also decreased by 2.2%, indicating multiple challenges faced by the company.
To address these issues, Volkswagen plans to boost performance through technological cooperation and introducing more new vehicle models. For example, in 2024, Volkswagen introduced new models such as the VW ID.7 Tourer, Audi Q6 e-tron, and the electric version of the Porsche Macan, with plans to heavily promote electric vehicles in the Western European market.
In the face of economic uncertainty and market pressures, Volkswagen’s response measures will determine its long-term performance in the Chinese and global markets. Simultaneously, changes in China’s economic trends and market competitive landscape will also have a significant impact on Volkswagen’s performance.