Volkswagen lowers sales and profit ambitions in China

Volkswagen is lowering its long-term sales targets in China amid continued weak demand in the world's largest auto market, its local chief said.

"We are adjusting our planning," China head Ralf Brandstätter told the German business daily Handelsblatt. "Instead of 3.5 million to 4 million vehicles, we now expect around 3.2 million by 2030."

That would still account for more than one-third of Volkswagen's global sales, but would be about 1 million vehicles below its 2019 peak of 4.2 million units in China.

Sales in the country, the German carmaker's largest market, fell 8% last year to below 2.7 million vehicles.

Brandstätter said it is unclear whether volumes will recover this year, describing 2026 as a "transition year." He said the company's electric vehicle push is expected to have a full impact only from 2027.

Wolfsburg-based Volkswagen is also lowering its profitability expectations in China, citing intense competition.

The days of margins above 10% are over, Brandstätter said, adding the company now targets returns of 4% to 6% by the end of the decade.

Volkswagen has already reduced production capacity in China, cutting around 1.5 million units of technical capacity since 2023, Brandstätter said in the interview published on Thursday.

Five plants have been sold, closed or repurposed.

Chief Executive Officer Oliver Blume recently said the group plans to cut global production capacity by a further 1 million vehicles to about 9 million units annually, roughly in line with current sales of 8.98 million vehicles last year.