The ID.Aura model should finally bring Volkswagen great sales success again in China. With its flowing body lines and sharply squinted headlights, the electric sedan doesn’t just look modern. It also comes with the latest technology, from fast charging to a driving assistant that maneuvers the car through the city almost alone – and all for a price equivalent to just around 14,000 euros. VW and its Chinese partners developed the systems for this in a very short time. Now the car is scheduled to come onto the market later this year as part of a flood of new models: “We are now starting the largest product offensive we have ever launched in China,” says VW CEO Oliver Blume. In China, it is now “crunch time” for Volkswagen, i.e. the hot phase in the fight for the future. Since Chinese competitors have systematically opened up the market in the People’s Republic, VW’s sales figures there have collapsed, falling by a third from the peak in 2019 to 2.6 million vehicles. Now 30 new models are scheduled to go on sale in China this year and next, all of them “electrified” – as pure electric vehicles, hybrids or combustion engines with range extenders, developed locally for the local market. In a conversation with journalists in Berlin this week, CEO Blume and China board member Ralf Brandstätter appeared combative. VW is an integral part of the Chinese automobile industry: “We are there to stay,” they asserted in the VW representative office on the Unter den Linden boulevard – behind them a glass wall with the motif of a dramatic orange-red sky over Shanghai. At the same time, there is already talk of a “transitional year” in the group: The new models will only gradually be reflected in the sales figures, and the recently sharp decline in profits from the Chinese business is unlikely to recover until next year at the earliest. The pressure remains enormous, especially on CEO Blume, who ended his dual role as CEO of the sports car brand Porsche at the turn of the year and now, as CEO of the VW Group, finally has to show tangible successes on his many construction sites. In Berlin on Tuesday evening, the manager assured that the pace of restructuring would remain high. Above all, the cost work must continue in all markets, he said, “also in order to be able to afford the necessary investments in the future.” A year and a half head start in China VW has recently fundamentally restructured its Chinese business. The Wolfsburg-based company has been working on new vehicle technology for the People’s Republic with local partners such as Horizon Robotics and Xpeng. Now they want to announce breakthroughs. As the group announced on Wednesday, a new electronics architecture has been completed that requires fewer central computers and enables functions from autonomous driving to wireless software updates. The group is also working on such a “zonal” architecture for the western markets; for this purpose it has signed a pact with the American start-up Rivian. In China, the engineers are about a year and a half ahead of their colleagues in the West: The system for the People’s Republic, internally called “China Electronic Architecture”, is scheduled to go into series production in the battery-operated ID.Unyx model in the second quarter. CEO Blume described the car in Berlin as a “tech pioneer” and it marked the beginning of “the production of software-defined vehicles in China for China.” China boss Brandstätter and his partners have also made a big splash elsewhere in the country. A chip developed with Horizon Robotics is expected to provide a further boost to self-driving systems, a technology that is spreading in China while Europe lags behind. The division of labor between the joint ventures with the long-standing partners SAIC and FAW, which recently seemed chaotic, has been reorganized. At the same time, a kind of Chinese Wolfsburg for local development has emerged in the city of Hefei. And now, says Brandstätter, an end is in sight to the price war that has been raging in the country for years and has pushed Western manufacturers in particular to the sidelines. “It would be an illusion to believe that prices will one day return to their old levels,” said Brandstätter in Berlin. “We now assume that the bottom has been reached and that prices will no longer fall.” But the headwind remains strong and the prospects for success are uncertain. Hardly anything shows this more clearly than the launch of a new Audi model that dispenses with the iconic four rings and instead comes with a new word mark – AUDI in capital letters. The model’s sales start seems weak, even if Audi emphasizes that the figures circulating so far do not yet allow any reliable conclusions to be drawn about sales success. At the same time, local competitors are gaining more and more ground in the country. The manufacturer Geely from Hangzhou has recently pushed past VW’s joint ventures and is now in second place behind BYD in terms of sales figures. China’s car manufacturers work quickly and pragmatically. Established brands like VW with their large apparatus can hardly keep up.More on the topicBlume and Brandstätter are now trying to use local production as a springboard into other markets. The low costs in China are a good starting point for increasing deliveries from there to Southeast Asia, the Middle East or parts of South America, it was said in Berlin. But even in these regions, the Wolfsburg-based company is increasingly encountering Chinese rivals who are pushing into all those markets in which political and regulatory requirements do not pose too high hurdles. This means that manufacturers from the People’s Republic are becoming suppliers to entire regions of the world, and the figures that VW has now given in Berlin make the pressure clear: within five years, the number of vehicles exported by Chinese automobile manufacturers has almost tripled to more than six million, said Brandstätter. One must expect that a wave of Chinese products will roll into world markets via the global south.
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