The Volkswagen Group is bracing for additional difficulties in China. Ralf Brandstätter, the executive responsible for the group’s Chinese operations, warned that the world’s largest automotive market could see a contraction for the first time in nearly a decade. Speaking to the FAZ, Brandstätter stated, “It cannot be ruled out that we could experience a shrinking market in China for the first time since 2018. In the best-case scenario, it will stagnate at 24 million vehicles”. One of the contributing factors cited is the reduction in subsidies for electric vehicles.
Brandstätter also lowered the growth expectations for the market. He revised down the projected total market sales for 2030, predicting it will reach around 26 million vehicles rather than the previously forecast 28 million. This development intensifies the competitive landscape. To counteract this, Brandstätter plans to introduce new models to defend the company’s standing as a leading international manufacturer in the country. He acknowledged the changing environment, saying, “But we certainly won’t return to the super profits of previous years. Those times are over. The competition in China is now simply too vast”.
According to Brandstätter, China’s current five-year government plan clearly reflects the nation’s high technological ambitions. He noted that Beijing aims to increase annual spending on research and development by seven percent every year. “These are massive investments. A large portion is being poured into artificial intelligence, quantum computing, and robotics. China is determined to assume a leading role in these areas”. He concluded by urging Germany to similarly refocus on technology, adding, “This creates economic strength, and with it, a renewed sense of confidence”.