After a strategic overhaul and significant investments over the past two and a half years, Volkswagen Group has reaffirmed its commitment to China, the largest automotive market. On April 24, the company unveiled a new vehicle lineup at the Auto Shanghai 2025, featuring ten models, including five making their global debut.
In an interview with China Daily, Oliver Blume, Chairman of the Volkswagen Group, acknowledged that the company had the wrong product strategy and approach in China in 2022. He expressed pride in the team’s progress, stating that this time, they were presenting tangible results, not just plans.
Volkswagen’s In China For China strategy is at the core of this initiative. It goes beyond a marketing slogan, focusing on vehicle development, technology application, and partner selection centered around the Chinese market. Ralf Brandstätter, CEO of Volkswagen Group China, emphasized that the strategy is about execution.
This strategy responds to heightened competition from local brands like BYD and XPeng, which caused a market share decline when Brandstätter took over in 2022. Since then, he has prioritized a localization strategy. A key example is the 2.4 billion EUR (about 2.5 billion USD) strategic partnership with Chinese AI firm Horizon Robotics, established in October 2022.
Volkswagen’s 3.5 billion EUR (approximately 3.745 billion USD) engineering center in Hefei, Anhui Province, will be a key hub for developing models tailored for Chinese customers. It will focus on features such as autonomous driving and digital infotainment to meet Chinese consumer expectations.
Volkswagen plans to launch new electric and hybrid models in China over the next 18 months. Developed locally at the Hefei engineering center, the vehicles will reflect Chinese trends and consumer demands, rather than adapting global platforms from Germany.
Volkswagen’s strategy mirrors that of other German premium brands like BMW and Mercedes-Benz, which have also started developing models specifically for China. Tesla has strengthened its localization efforts by opening an autonomous driving research center in Shanghai.
Volkswagen’s restructuring in China addresses the rise of local brands, including BYD, XPeng, and Li Auto, as well as tech firms like CATL and Horizon Robotics. To remain competitive, the company is shifting its approach, moving away from its traditional premium image based on German engineering.
Instead of adapting German platforms, Volkswagen is now operating independently from the planning stage in China. The expansion of the Hefei Engineering Center and collaboration with Horizon Robotics reflect this strategic shift.
Recovering in the Chinese market is crucial for Volkswagen’s overall performance. The years 2024 and 2025 will determine how deeply global automakers can integrate into China’s technology ecosystem, which is key to long-term competitiveness. “In China For China” is now an essential strategy, not just an option.
