China's electric vehicle market is the largest in the world, and is dominated by both established and emerging domestic competitors engaged in fierce price wars. Despite remaining the market leader in the still-profitable combustion engine segment with a 22% share, VW has so far failed to establish a foothold in the future-oriented EV segment.

The numbers tell a sobering story. Deliveries in China have dropped from 4.2 million vehicles before the Covid-19 pandemic to just 2.9 million last year. After a 9.5% decline in 2024, deliveries fell another 2.3% in the first half of 2025 to 1.3 million units. Deliveries of fully electric vehicles plummeted by nearly 35%. Even so, China still accounts for around 30% of VW Group’s global vehicle sales.

Profits from the group’s Chinese joint ventures have also fallen – from 5.2 billion euros ten years ago to 1.7 billion euros last year. For 2025, VW expects a share of operating profit in the range of 500 million to 1 billion euros.

Against this backdrop, the VW Supervisory Board recently extended Ralf Brandstätter’s contract as a Group Board Member until the end of July 2028. The 56-year-old has overseen the company’s China business since summer 2022. Since then, the Braunschweig native has focused on boosting Volkswagen’s competitiveness in China – both in terms of technology and cost structure. The strategy is clear: „In China, for China.“

By building up local development capabilities, and forging partnerships with Chinese high-tech firms and manufacturers, the group says it has now achieved „deep integration of its vehicle development into the local ecosystem.“

According to VW, cars are now being developed 30% faster and with 40% lower costs than before, by utilising cutting-edge technology, all while maintaining high safety and quality standards. That is aimed at narrowing the gap with domestic competitors.

New products and technologies, tailored specifically to the preferences of Chinese consumers, are expected to hit the market from late 2025. Observers noted a strong response at the Auto Shanghai trade fair in April to the first „In China, for China“ models developed by the VW brand, and the newly created China-exclusive Audi brand. Brandstätter’s contract extension is therefore widely seen as recognition of the strategic progress made in recent years and showcased at the auto show.

Still, success in China’s fiercely contested EV market – which VW sees as distorted by irrational price competition among more than 130 brands – remains to be proven. The company insists it is staying out of the price war.

What is already underway is the group’s largest product offensive in over 40 years of doing business in China. By 2030, VW plans to offer around 50 so-called „New Energy Vehicles“ through its various brands.

Brandstätter, who joined VW in 1993 and previously headed the Volkswagen passenger car brand, is said to be optimistic. With the Chinese car market expected to grow by 5 million units to a total of 28 million vehicles over the next five years, VW believes it could sell 3.5 to 4 million vehicles in China by 2030 – at an appropriate level of profitability. The group aims to increase the share of operating profit from its Chinese joint ventures to 2 billion euros by 2027.