Porsche dealer in Shanghai: Adapt sales network to reality. Photo: Bloomberg
Berlin. The sports car manufacturer Porsche is preparing to be able to sell permanently lower quantities in China. “The entire premium and luxury market in China has collapsed by around 80 percent within a short period of time, and we do not expect a recovery,” VW CEO Oliver Blume told journalists in Berlin on Tuesday evening.
In 2025, Porsche delivered almost 42,000 vehicles in China; at the beginning of the decade, the manufacturer was still close to the 100,000 unit threshold. Porsche’s Chinese business has more than halved within just a few years.
According to company circles, the Zuffenhausen-based company expects delivery figures to continue to fall this year. There is talk of 30,000 to 40,000 units. Porsche did not want to comment on this.
In China, car manufacturers have been engaged in a ruinous price war for years, which also affects premium models. In addition, the general conditions in the People’s Republic have become increasingly difficult for Porsche in recent months.
A higher luxury tax has been in effect since 2025. It mainly affects models from manufacturers such as Porsche, Mercedes or Ferrari. There are also new regulations for the maximum consumption of electric cars, which primarily affect large and heavy cars. At the same time, Chinese customers are turning more to domestic brands. They are faster than international brands, especially when it comes to electrification and software.
Porsche relies on special software for the Chinese market
Porsche has reacted and adapted its structures in China: dealer networks are being reduced in size and the local organization is being streamlined. The aim is to make the business profitable again at a low volume level.
Blume sees the causes of the weakness less in its own products than in the market environment. New models such as the Porsche 911 Turbo S and the electric Cayenne SUV would set standards in their segments.
Porsche is also trying to catch up digitally: new models receive infotainment and software solutions developed specifically for China, which are now also used in combustion vehicles. Whether this will be reflected in increasing numbers remains to be seen.
For the VW Group, the development at Porsche is another stress test in the world’s most important automobile market. In 2025, the group’s deliveries in China slipped to a 14-year low. With fewer than 2.7 million vehicles sold, sales were eight percent below the previous year’s figure. After years of market leadership, VW is now only in third place in China – behind the Chinese companies BYD and Geely.
VW combustion engines are still running well in China
The gap is particularly large in the electric segment. According to data from industry service Marklines, the VW core brand only delivered 83,728 battery-electric vehicles in China last year – fewer than Toyota with 108,713 units. Volkswagen’s electric market share is therefore in the very low single-digit range. When it comes to combustion engines, however, VW continued to expand its position in China and has a market share of more than 22 percent. The business finances the conversion to electric and hybrid vehicles.
The aim is to make the electrical business as profitable as the combustion engine business by 2030. The management around Volkswagen’s China boss Ralf Brandstätter does not expect higher prices in China. The board said the cost structure is being adjusted so that money can be made in this environment.
Volkswagen is launching the largest product offensive in its history in China this year. Around 30 new electrified models are expected to come onto the market by 2027 and around 50 by 2030. The first Volkswagen developed entirely in China recently rolled off the assembly line. The group is increasingly relying on partnerships for its new models, for example with the electric car manufacturer Xpeng or VW’s joint venture partner Saic.
Nevertheless, Volkswagen does not expect a noticeable recovery in 2026 either. “2026 is a year of transition,” said China boss Brandstätter. “We expect the first wave of products to be fully effective in 2027.” The decisive factor is not the number of new models, but whether development, software, works and trade deliver at the same time.
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For the past financial year, Volkswagen expects a share of profits of less than one billion euros from its China joint ventures. In peak years the value was four to five billion euros. For 2027, the group is again aiming for a result of more than two billion euros.