VW sees China market accelerating after tough first quarter

The Volkswagen Group expects growth in the Chinese passenger car market to rebound this year as the wave of COVID infections continues after supply chains have been stressed and the pandemic has eased the reopening of the country.

The Chinese market is expected to grow by 4% to 5% this year, accelerating from 1.6% last year to reach 23 million vehicles, according to Ralf Branstetter, head of VW’s China business.

While demand indicators are picking up, China is suffering from a surge in infections following the easing of COVID-Zero policies.

“The first quarter will certainly be a bit more difficult than the rest of the year,” Brandstaetter told journalists in Berlin. “This means that the coming weeks should not be affected too much by the effects that are still present today.”

While growth accelerates, Western car makers are losing ground to local makers offering cheaper models tailored to local tastes. Tesla already cut prices in China in October.

Brandstaetter declined to say whether VW would follow suit.

Volkswagen has long dominated China’s internal-combustion-engined vehicle market, but has lagged domestic rivals in electric vehicles, according to Chinese brokerage firm CMBI. According to Chinese brokerage firm CMBI, the VW brand’s 1,962 units were the most notable compared to BYD, which sold 40,046 EVs from January 1 to 8.

Last year, sales in VW’s most important market fell 3.6% to 2.2 million units during the country’s tough COVID measures, which at times closed 70% of its showrooms.

Skoda EV, smaller VW

The VW Group will expand its EV range in China over the next two years with the Audi Q4 e-tron and VW ID7 sedan. Brandstaetter says it plans new models such as sedans and SUVs that are smaller than the VW ID4, but not the entry-level ID2, which is planned for Europe.

Brandstaetter said the company is currently considering whether to offer an electric version of Skoda as it currently has a small presence in the country.

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