On China’s Capital Markets Day in Beijing, the Volkswagen Group unveiled its updated strategy for the Chinese market.
The focus is on strengthening technological capabilities and reducing costs in a rapidly growing market.
The Group aims to achieve cost parity with local competitors in the compact car segment by 2026 and gain further momentum through a realigned strategy and an efficiency programme that has already been launched.
Furthermore, the company emphasised its commitment to its “In China, For China“ strategy: it introduced measures to better cater to Asian customer needs, accelerate model development and time to market, as well as significantly reduce costs.
The aim is also to better leverage the market’s innovative power and increase local value creation through more internal development capabilities and strong local partnerships.
As a result, the company aims to strengthen its position as the number one international OEM in the Chinese market and has set ambitious targets for 2030: approximately four million vehicles sold and a proportional operating result growth of around three billion euros, including the consolidated total.
“China is a very important market for us and will continue to be so. Currently, there are 50 million of our vehicles on its roads, and we sell one in three cars globally in this country. It is our second local market,” said Oliver Blume, CEO of the Volkswagen Group at the Capital Markets Day in Beijing.
He added: “The direction is set, and we want to benefit more from the market growth momentum from 2026 onwards. The focus will be on the consistent implementation of the strategy, further strengthening our customer orientation, and accelerated model development.”
To benefit from this growth, the Group will expand its fully electric portfolio to the compact segment through its Volkswagen brand, building on its China Mainland Platform (CMP).
The CMP aims to reduce costs by 40 per cent by 2026, particularly through the electric/electronic zonal (E/E) architecture developed in collaboration with XPENG and competitive battery technology.
Additionally, the use of the ‘China Electric Architecture’ (CEA) will further standardise the digital architecture, thereby achieving greater profitability.
With the implementation of the new CEA, the Volkswagen brand significantly accelerates its development pace.
In the dynamic Chinese market, Volkswagen can thus offer innovations to its customers more quickly.
Thanks to the new local structure with Volkswagen Group China Technology Company (VCTC), the group’s own research and development centre in Hefei, the group can shorten the time to market for new local products by 30 per cent.
With the VCTC, Volkswagen consolidates in Hefei all development units and decision-making processes for vehicles destined for the Chinese market.
This reduces interfaces between different areas and increases efficiency.
Coordination takes place in the same time zone and with a sole focus on the local market.
Additionally, the Tech Company brings together vehicle and component development, as well as procurement from the beginning of the development process.
Simultaneous work saves additional time and allows for an optimised cost structure.
Furthermore, the VCTC maximises cost competitiveness by focusing on local concepts at the vehicle, platform, module, and system levels.
This includes ‘ready-to-use’ modules manufactured by local suppliers when reasonable and leveraging the global technology of the Volkswagen Group when desirable.
“With this increased efficiency and speed, significant economies of scale, and a strong cost position, Volkswagen remains profitable and cash-generating, even in a challenging market,” Blume stated.
He added: “At the same time, we ensure our ability to finance future investments and, simultaneously, secure a strong financial position.”
