It is becoming increasingly difficult for Volkswagen in the Chinese market. As reported by the Wall Street Journal, sales there have fallen by 20 percent in the past three years. How VW must react.
VW is under pressure in China. The market share in China fell from 20 to 16 percent within three years. According to the Wall Street Journal, the reason for this is the increasing competition in the Chinese automobile market. VW maintains 40 production sites in the large country, one of which is located in the north-western province of Xinjiang, where the Chinese leadership is committing crimes against humanity against the Uyghur ethnic group, according to the United Nations.
Herbert Diess was criticized during his time as CEO of Volkswagen for not closing the plant in Xinjiang. His successor, Oliver Blume, who has just taken office, will continue to support the group’s position on Xinjiang. If you look at the importance of the Chinese market for the car manufacturer, which also includes the brands Audi, Bentley, Porsche and Skoda, it quickly becomes clear why VW is careful not to take sides against Beijing for the oppressed Uyghurs: Last year, Volkswagen sold 37 percent of its new cars in the People’s Republic, 15 percent of the pre-tax profit of the Wolfsburg-based company comes from China.
Although Volkswagen has tried everything to put itself in a good light in Beijing, other manufacturers have also recognized the signs of the times: Chinese customers therefore consider the electric car manufacturer Tesla to be an increasingly attractive alternative to German automobiles. This may also be due to Tesla boss Elon Musk, who has made little effort to make himself popular with the communist leadership in recent months: Musk advised the people of Taiwan to join the People’s Republic. The manager also advised Ukraine to seek a way to make peace with Kremlin aggressor Putin. The People’s Republic under its leader Xi Jinping supports Putin’s illegal war. In August, Musk became the first foreign auto exec to advertise his company and vehicles in a party-affiliated magazine. Around 22,000 Teslas roll off the assembly line at the plant in Shanghai every day. The US group is responsible for 11.6 percent of newly registered electric vehicles in China, while VW is only responsible for 3.5 percent.
But Tesla isn’t the only concern the new VW CEO has to worry about. In the Middle Kingdom, more and more players are appearing: BYD, XPeng and NIO. The electric car manufacturer NIO even wants to enter the German market with its models and compete with the German automotive industry in its home country. At the beginning of October, the company gave the starting signal at an event in Berlin, to which people from the management level of NIO also traveled.
Analysts believe that the advances made by domestic manufacturers have meant that the Chinese no longer only see German cars as high-end as they used to. Even if the communist leadership is increasingly adopting nationalistic tones, this cannot be the sole reason for VW’s loss of image. The most successful launch of a new vehicle, also an electric car, is the result of a collaboration between General Motors from the USA and Liuzhou Wuling Motors, a Chinese company.
Unlike Volkswagen’s recent launch, the ID.4 electric SUV, the competitor’s small, nimble vehicle is seen as more fitting the proportions of Chinese highways and roads within towns and cities. Volkswagen, so the verdict sounds, has designed its new large vehicle with the market in mind.
Volkswagen has announced that it is now doing its homework and investing in better software, autonomous driving, and the charging times of its electric vehicles. That’s why Wolfsburg has also invested massively in technology development in China, one billion in the current year.
The Wall Street Journal quotes Ralf Brandstätter, the manager responsible for Volkswagen business in China, as saying that, unlike in the West, young people in China in particular are very tech-savvy. He therefore advises his group to establish two completely separate “ecosystems” in the future, one for customers in China, the other for those in the western world. “De-Coupling”, which is used as a keyword by democratic politicians to set in motion a process that will begin to reduce dependence on the Chinese market and thus political influence by the Beijing nomenklatura, will be used in Wolfsburg by China and the Chinese market thought from here, and not from Germany. The German automobile manufacturer does not see the technological future at home, but in the Far East.
Many want to boycott the soccer World Cup in Qatar. In our multimedia story you can read why and what exactly the host country is being accused of and what has happened in the desert state since 2010.
