The Volkswagen Group announced it is further expanding its production and innovation in China. Particularly, the German carmaker will pour in €2.5 billion as part of its capacity and R&D expansions.

In addition, the company is also preparing to produce two Volkswagen brand models. Currently, these new models are under development along with Chinese partner XPENG. Production of the first model, an SUV in the mid-size segment, will begin as early as 2026. 

Drives Localized Development

Accordingly, Volkswagen has been a pioneer for individual mobility in China for 40 years. Moreover, its network in China features 39 plants, 90,000 employees, and around 50 million customers who drive a Group brand vehicle. Together with its joint venture partners, Volkswagen is an integral part of China’s industrial ecosystem.

With its rapid transformation towards fully connected electric mobility, the Group is consistently realigning its activities in the region. Thus, Volkswagen is driving forward the localization of development and aligning its products with changing customer needs.

The plan to introduce two new models will accelerate the electrification of the Volkswagen Group’s model portfolio in China. By 2030, more than 30 all-electric models of all Group brands will be on offer in China alone. Volkswagen China Technology Company (VCTC), the Group’s 100% owned subsidiary based in Hefei, is the central unit. Particularly, they are responsible for product localization and, in close collaboration with partners, have taken on central development tasks.

VCTC is also developing the first China-specific electric architecture, the China Main Platform (CMP). Specifically, at least four additional models for the electric entry-level segment in the compact class emerge from 2026.

Ralf Brandstätter, Member of the Board of Management of Volkswagen AG for China, said, “Our new production and development hub in Hefei will bring technologies to market around 30 percent faster in the future. This additional investment in the site underlines our ambition to quickly expand our local innovative strength.”

Moreover, Brandstätter said, “Today, around 50 million customers in China drive a Group product. The basis for our success is the cooperation with our strong Joint Venture partners, SAIC and FAW. Together, we are now accelerating the transformation towards smart electric mobility.”

Clear strategic focus on Chinese customers

Over the past four decades, the Volkswagen Group, together with its long-standing Chinese partners SAIC and FAW, sees the needs of Chinese customers. With Santana and Jetta, millions of customers were able to start their individual mobility journey. Later, the first China-specific models, such as Lavida and Sagitar, became million sellers and are still hugely successful in the market today. 

In fact, the group started its electrification strategy in China as early as 2017. In the same year, Volkswagen founded China’s first pure Joint Venture for electric vehicles in Hefei, Anhui Province. Particularly, with manufacturer JAC.

Today, Volkswagen Anhui is the Volkswagen Group’s first majority-owned Joint Venture for cars in China. The site in the eastern Chinese province is the Group’s production, development and procurement center in China and will further evolve into a strategic innovation hub in China, for China.

Strong foundation in China

In China’s highly competitive market environment, the Volkswagen Group can rely on its strong market position. Not only is the Group the clear market leader in China in terms of new registrations, it is also the clear leader in terms of vehicles in operation (PARC). In fact, around 50 million customers now drive a car produced by the Group brands.

In addition, brand loyalty is above the market average for the Group’s locally produced Audi and Volkswagen models. As a result, Volkswagen’s 40-year presence in China is an advantage in this dynamically developing market.    

Most importantly, more than 3,500 dealers in the nationwide retail network are the point of contact for customers of the Group’s brands. Customers can choose from around 160 passenger car models from the Audi, Volkswagen, Porsche, ŠKODA, Bentley and Lamborghini brands – and the motorcycle manufacturer Ducati also offers ten of its models in China. 

Volkswagen has 39 plants in China, making it an integral part of the country’s industrial ecosystem. Thus, strong partnerships connect the Volkswagen Group with the Chinese high-tech companies Horizon Robotics, ThunderSoft, and ARK.

Meanwhile, over 90,000 employees work for the Group in China, making Volkswagen the largest European employer in China. 

-15 April 2024-