VW Group pitches comeback in China with new models, in-house assisted driving

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By Victoria Waldersee

SHANGHAI (Reuters) -Volkswagen Group showcased five new models developed for China and an in-house assisted driving system on Tuesday in Shanghai as it fights to win back share in the fiercely competitive market.

The new models include new VW cars and a new Audi range for the Chinese market.

The German carmaker also plans to start exporting VW cars from China, aiming to sell some models in other Asian markets, South America and the Middle East, its China chief Ralf Brandstaetter said at an event ahead of the Shanghai auto show starting on Wednesday.

The VW brand presented three of its upcoming models at Tuesday’s event. None are ready yet for mass production but are part of the group’s plans to regain ground as foreign carmakers are losing market share in China, the world’s biggest auto market, to a swathe of domestic manufacturers.

One, built by VW’s joint venture with China’s state-owned FAW, is the first model to be based on a new China-specific platform, the CMP, designed to reduce costs for entry-level smaller vehicles by 40%.

Volkswagen, once the top seller of passenger cars in China, lost its crown to Chinese EV maker BYD last year after its sales slipped by 9.5% to just under 2.93 million cars, well below BYD’s 3.84 million.

Its market share in the country fell from 19% in 2019 to 14.5% last year.

Volkswagen’s premium Audi brand is fighting back with a range of new longer versions of its models designed for the Chinese market, where wealthier consumers with chauffeurs often sit in the back of their cars.

On Tuesday, it also showcased the first vehicle of a new model line with a different logo from its famous four rings in a bid to win back sales.

The new model line, simply named AUDI in capital letters, will be targeted at younger consumers. Its first car for mass production, the E5 Sportback, will be built on a platform from its joint venture partner SAIC, a Chinese state-owned carmaker, and priced below the German automaker’s other models.

CARIZON, a joint venture between Volkswagen’s software subsidiary Cariad and China’s Horizon Robotics, demonstrated the carmaker’s first in-house automated driving system, to be integrated into one of its cars this year. A more advanced version system will be available in its entry-level cars from 2026.

CHINA EXPORTS

Volkswagen’s plans to start exporting some VW models from China come as carmakers in China, including Volkswagen, are grappling with how to make use of unused production capacity as annual demand for cars has stagnated at around 22 million cars since 2019.

“It is fully clear that VW will not export to the U.S. or Europe (from China) except for the Tavascan. But other markets are open like Asian markets, South America and the Middle East,” Brandstaetter said.

“They are open to products from China. We have competitive models and we are approaching doing export from China to these regions.”

He did not say which models would be exported from China.

Alongside the CMP, Volkswagen also plans a new vehicle platform in China without the help of a joint venture partner for both battery-electric cars and EVs equipped with so-called range extenders, a small combustion engine which adds extra range.

“You can’t predict what the share of each type of EV will be in 2030. We need to adapt our platforms to provide this flexibility,” Brandstaetter said, adding that the ingredients for success in China included assisted driving capabilities, cost management and flexibility in drivetrains.

“There is no reason why Volkswagen can’t be as fast and as competitive as a Chinese startup with this approach,” he said.

(Reporting by Victoria Waldersee;Editing by Ludwig Burger and Susan Fenton)