(MENAFN- Asia Times) Volkswagen Group China is turning to local procurement to reduce costs as it accelerates a multi-year investment plan aimed at becoming one of China's leading electric vehicle producers.
The automaker's new“in China for China” strategy encompasses R&D, a substantial expansion of manufacturing capacity and a wider scope for collaboration with local partners.
Once known as the maker of Shanghai taxis, Germany's largest automaker and its joint ventures now have nearly 100,000 employees and more than 40 vehicle and component manufacturing sites in China. From industrial robots and components to autonomous driving software and systems, it is deeply embedded in China's automobile supply chain.
This is not what European Union bureaucrats or US politicians have in mind when they talk about“de-risking” economic relations with China but it is what the market dictates. Decades of relationship building and a commanding position in the world's largest car market are now on the line.
In 2023, the Volkswagen Group delivered 3.2 million vehicles in mainland China and Hong Kong, a year-on-year increase of 1.6%. Deliveries of Audi premium brand vehicles rose 13.5% to 729,000 vehicles. Deliveries of battery electric vehicles (BEVs) increased by 23.2% to 191,800, or 5.9% of the total Chinese market.
In comparison, BYD sold slightly more than 3 million vehicles last year, 8% of which were exported. These included 1.6 million BEVs and 1.4 million hybrids. Tesla Shanghai delivered nearly 950,000 BEVs, slightly more than 600,000 of them to customers in China (Tesla does not make hybrids).
BYD is in the EV lead in China. Image: Twitter
Volkswagen Group China's BEV deliveries were up 72.3% in the fourth quarter, with its ID.3, ID.4 and Audi e-tron models contributing to the surge in sales. The ID.3 was the top-ranked compact hatchback while the ID.4 was one of the best-selling compact SUVs.
Zhang Lan, pice President of Group Sales of Volkswagen Group China, said that to maintain momentum in China's highly competitive market,“we must continue tapping new market segments quickly, aligning our portfolio with new market trends effectively, while working on our cost structures.”
“It is not all about market share. Profitability continues to be our top priority,” said Ralf Brandstätter, chairman and CEO of Volkswagen Group China.
“In recent months, Volkswagen has identified and implemented cost optimizations for its fully electric vehicles in China,” he added.“We will not push ahead to grow at any cost in this highly competitive environment. We are focusing on investments for the next leap in innovation instead.”
Volkswagen increased its share of China's internal combustion engine (ICE) market from 19% in 2022 to 20% in 2023, with deliveries rising by 0.8% to 3.04 million vehicles.
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