VW says it can compete again in China

Volkswagen has spent the past three years rebuilding its position in China. Now, for the first time, its top executives are signaling that the reset phase is largely complete—and that the next stage will be defined by execution.

At its media night last week, the German automaker outlined an ambitious roadmap: around 30 electrified models in China by 2027, rising to 50 by 2030, including roughly 30 fully electric vehicles, all of them developed locally.

Beyond hardware, it is also moving toward what it calls "AI-defined vehicles", with plans to introduce an onboard AI agent powered by a locally trained large language model starting later this year.

More noteworthy than the ambitious plan, however, is the tone of its executives.

"We are now able to compete in the NEV segment," Volkswagen Group CEO Oliver Blume told China Daily on Thursday.

"That makes me very proud," he said, admitting that "back then we weren't sure if it would be possible to change our footprint here in China so quickly."

For decades, Volkswagen was one of the best-selling carmakers in the country.

But around 2022, its product strategy became misaligned with a market rapidly shifting toward electrification and intelligent features. Internally, the need for change became unavoidable.

Ralf Brandstaetter, who arrived in China as CEO in August 2022, recalled the moment candidly.

"As you remember, it was still COVID time. Then I was in the market as one of the first foreign executives who could really experience onsite mentality," he said.

"When I presented the status quo and what needed to be done… for everyone in the room it was clear: something needed to be changed."

That realization triggered a structural reset in how Volkswagen operates in China.

At the core of the shift was a decision to move key capabilities closer to the market. "We needed to move R&D to China. This was a directional decision," Brandstaetter said.

Today, Volkswagen operates its largest development center outside Germany in China, focused on software-defined vehicles.

Of roughly 3,000 engineers, about 2,800 are local hires. The impact has been tangible—shorter development cycles, closer alignment with consumer expectations, and tighter collaboration with joint venture partners FAW and SAIC.

"It connects us to the China speed of the ecosystem," Brandstaetter said.

At the same time, Volkswagen has been redefining its long-standing joint venture model.

"I know that in the Chinese community, some people think the joint venture model is outdated," Brandstaetter said. "We are demonstrating that it is not outdated. Because we have come from joint venture to joint creation."

Rather than operating in parallel, Volkswagen and its partners are increasingly co-developing products, such as the ID. ERA 9X, the brand's first range-extended EV, and the China-specific electric AUDI vehicles, while integrating teams more closely.

The reset has also extended beyond traditional partners. Volkswagen has expanded cooperation with companies such as XPeng, Horizon Robotics and Gotion, embedding itself more deeply in China's technology ecosystem.

"AI for all is coming like a wave," Brandstaetter said. "We need to maintain a high speed of innovation."

Against this backdrop, Volkswagen's new roadmap emphasizes a transition toward AI-driven vehicles, with onboard AI agents and deeper integration of intelligent systems into both driving and cockpit functions.

"Chinese consumers don't buy tradition, they buy tech," Brandstaetter said.

Despite the more confident messaging, both executives were careful to avoid suggesting the turnaround is complete.

"It's only a starting point," Blume said. "When you start to relax, you start to lose."

Brandstaetter offered a similar view: "It's like a marathon. Maybe the first five kilometers are done, but three quarters are still ahead of us."

That realism is reflected in Volkswagen's revised China target: around 3.2 million annual sales by 2030, down from earlier expectations but still an increase from current levels.

"I think we need to be realistic," Brandstaetter said, pointing to a market with more than 100 competing brands.

Yet Volkswagen's message is not that it has regained its former dominance, but that it has rebuilt the foundation to compete again—organizationally, technologically and culturally.

"Training has a lot to do with learning," Blume said, describing China as the fitness center of the global auto industry, when asked about the hardest part of training for Volkswagen.

"Chinese people are very pragmatic, very disciplined, passionate, and they have a strong willingness to win," he said.

"This was a process we went through, and it was not easy to change our mindset. But today, we can say that we have changed it, and we are now seeing the results."