BEIJING, April 21 (Reuters) – More than 40 years after Volkswagen stole the show at its first Chinese auto fair, it has lost its cutting-edge status in the country, with domestic brands setting the pace for a younger generation of tech-hungry drivers.
The combustion-engine legacy of “Made in Germany” no longer holds much sway in what is now the world’s largest car market, where local automakers are rolling out attractive, affordable electric vehicles that are essentially mobile phones.
“Maybe some young customers perceive us as a parent brand,” the China CEO of the Volkswagen brand, Robert Cisek, told Reuters.
Blinded by the rapid growth of Chinese brands, sales at Volkswagen, its Porsche and Audi units and rivals BMW and Mercedes-Benz have all slumped, threatening to strengthen the bleeding in a market that accounts for a third of their sales.
After spending a quarter century as China’s No. 1 automaker, Volkswagen will be overtaken by EV heavyweight BYD in 2024 and overtaken by Geely in third place in 2025.
For these companies, the transformation of China’s auto market — from a growth driver to a battleground — is “beyond imagination,” Cisek said.
From Market Pioneers to EV Laggards
When Volkswagen participated in its first Chinese auto show in Shanghai in 1985, locals were impressed by the quality of the German automaker’s marketing materials.
“We were met with unimaginably large crowds and our brochures flew off the shelves,” then-CEO Carl Hahn, who oversaw the company’s entry into China, wrote in his memoirs. “For people back then, it was enough to marvel at the quality of paper and print and dream of owning a car.”
Now, the German auto group just needs the glossy paper to make a comeback at this year’s Beijing Auto Show, which starts on Friday.
By dominating combustion-engine car production, automakers like Volkswagen find themselves racing to market with more than one in four new cars fully electric.
As China’s car market boomed and local brands launched a plethora of consumer-friendly EVs, German carmakers lost ground. Collectively, their sales fall by a quarter over five years to 3.9 million vehicles in 2025, according to S&P Global Mobility data.
The challenges have intensified this year as Chinese brands enter the premium segment, targeting affluent consumers who once coveted German quality, analysts said.
