Volkswagen Faces Declining Sales Amidst Competitive Challenges in China

In 2025, Volkswagen delivered approximately 4.73 million vehicles globally, reflecting a slight decline of 1.4% compared to the previous year. The company experienced growth in Europe, with a 5.1% increase in deliveries, and a notable 18.5% rise in South America. However, challenges persisted in China, where deliveries fell by 8.4%, and in North America, where they decreased by 8.2% due to tariffs and market conditions.

Volkswagen delivers 4.73 million vehicles worldwide and further consolidates its market leadership in EuropeReutersVW Group EV Sales Fall 44% in China in 2025, Rise 32% Globally

Volkswagen's sales in China dropped by 8% year-on-year, with the company delivering over 2.69 million vehicles in 2025. This decline has resulted in Volkswagen losing its long-held position as the top-selling foreign automotive brand in China, falling to third place behind BYD and Geely Auto. The company's market share in China decreased from 12.2% in 2024 to 10.9% in 2025, as local competitors gained ground, particularly in the budget segment.

Volkswagen overtaken by Geely in China vehicle salesVolkswagen drops to third in China sales as fast-growing Geely Auto pips itVW Group EV Sales Fall 44% in China in 2025, Rise 32% Globally

The competitive landscape in China has intensified, with domestic brands increasingly favored by consumers, partly due to state subsidies for electric vehicles (EVs). Volkswagen's sales of battery electric vehicles in China plummeted by 44% in 2025, while globally, the company saw a 32% increase in EV sales, totaling 983,100 units. Despite this global growth, the share of EVs in Volkswagen's total sales in China fell to 11.7%, down from nearly 28% in 2024.

VW Group EV Sales Fall 44% in China in 2025, Rise 32% GloballyVolkswagen overtaken by Geely in China vehicle salesVolkswagen Group’s sales declined by 8% Y-o-Y in China as the top-selling foreign auto brand in 2025

In response to these challenges, Volkswagen has accelerated its initiatives to regain market share in China. The company has partnered with local firms, including FAW Group and XPeng, to develop vehicles tailored to Chinese consumers. Volkswagen plans to launch over 20 new electrified models in China by 2026, with an ambitious target of approximately 50 new energy vehicles by 2030.

Volkswagen Group’s sales declined by 8% Y-o-Y in China as the top-selling foreign auto brand in 2025

Marco Schubert, a member of Volkswagen's extended executive committee for sales, acknowledged the intense competition in China and the impact of tariffs and the discontinuation of EV subsidies in the U.S. He stated, “Despite fierce competition from more than 100 automotive brands and heavy price pressure, the group has remained committed to its 'value over volume' principle.”

Reuters

Critics argue that Volkswagen's slower adaptation to the rapidly electrifying market in China has contributed to its declining sales. The company's reliance on traditional gasoline-powered vehicles and its late entry into the EV market are seen as significant factors in its loss of market share.

VW Group EV Sales Fall 44% in China in 2025, Rise 32% Globally

Looking ahead, Volkswagen aims to enhance its software capabilities and develop in-house technology for next-generation smart cars in China. The company is also exploring opportunities to export vehicles developed in China to other markets, as it seeks to navigate the challenges posed by domestic competitors and changing consumer preferences.

Volkswagen drops to third in China sales as fast-growing Geely Auto pips it