Volkswagen has long emphasized in China that it produces for the Chinese market. The Wolfsburg-based company initially didn't want to export its Chinese cars. But that is changing now - but why?
Volkswagen wants to export more from China. Photo: Katharina Kausche/dpa
Hefei. In view of the weakness of the Chinese car market and more competition from the People's Republic abroad, the Volkswagen Group is changing its China strategy. Instead of the previous motto “In China, for China”, the Wolfsburg-based company is now targeting markets outside the People’s Republic with “In China, Beyond China”, as the company announced in Hefei, eastern China.
VW spoke of a “decisive change” that positions China not only as one of the group’s most important markets, but also as a central innovation and export hub for its global business. In the future, Volkswagen wants to serve more markets in Southeast Asia, Southern Africa and South America with its joint ventures in China. In April, the group hinted at possible plans at the auto show in China.
VW targets the Global South
Volkswagen is already exporting vehicles from China to the Middle East or to Kazakhstan and Uzbekistan, it said. The technology developed in China is intended to be the basis for combustion engines, electric or hybrid cars intended for the Global South. “Before the end of this decade, South America will be the first region to incorporate technologies developed in China into its local portfolio,” VW promised.
Volkswagen had previously focused its production in China on the Chinese car market. Exports were not necessarily part of the plan under “In China, for China.” But in addition to the high competition and price pressure from Chinese brands, the weak car market in China is now also causing problems.
Situation in China difficult
Latest data from the Chinese Passenger Car Association (CPCA) for the overall market shows a 21.7 percent decline in sales figures for the first nine months of this year. As a consequence, manufacturers are exporting and pushing into Europe but also into markets in the Global South that have previously received less attention. According to CPCA data, export figures jumped 73.7 percent in September.
Business in China is also difficult for Volkswagen: In the third quarter, sales fell by 38.5 percent to 405,800 cars. The decline there accounted for more than 80 percent of the overall decline.
Why VW exports from China
With the change in strategy, Volkswagen not only wants to defy Chinese competition in other markets, but also serve new countries. “China is exporting competitive pressure,” said company circles. This would be difficult with products from Europe, which is why VW wants to export from China.
According to Europe's largest car manufacturer, the technology developed in China enables exports from the People's Republic. In China, VW benefits from lower development costs and shorter times to market entry. The group now presented Vega at the research and development site in Hefei. The technology system is the result of being able to develop, integrate and scale cutting-edge technologies faster and more cost-effectively, explained VW's China boss Ralf Brandstätter, according to the statement.
Behind Vega lies the electronic architecture, vehicle platforms and driver assistance system developed in China. According to Brandstätter, this will strengthen competitiveness in the local market and open up new business opportunities beyond China. According to the statement, CEO Oliver Blume called China the “innovation engine” and increasingly the “product and technology center for our global markets.” Just the day before, Federal President Frank-Walter Steinmeier visited the Hefei location during his ongoing trip to China.
