Competitive Situation in China
- Market share losses of German manufacturers: In the Chinese market, German carmakers like VW, BMW, and Mercedes continued to lose sales in the first quarter of 2025: VW lost 7%, BMW 17%, and Mercedes 10% compared to the previous year. Despite major announcements regarding the e-mobility offensive, VW was unable to significantly increase its market share in China; the share of German brands was only five percent in 2024 and even decreased further.
- Rise of Chinese manufacturers: Chinese companies like BYD have become the world market leaders in electric vehicles (EVs) and hybrids. BYD’s offerings have significantly outperformed those of German manufacturers, although the company has not yet achieved great success in Germany. Geely has also become the new market leader in the Chinese automotive market with a market share of about 13%, while VW slipped to third place.
- Technological lead of China: The Chinese automotive industry is developing technologically at a rapid pace – particularly in autonomous driving. In cities like Shenzhen, autonomous vehicles and robotaxis are already operating without drivers in regular road traffic. Furthermore, Chinese companies are heavily focused on software development, AI systems, and connected vehicles, which further enhances their competitiveness.
Strategic Responses from Volkswagen
- Shifting development to China: To remain competitive, Volkswagen is shifting parts of its electric vehicle development directly to China. This aims to help respond more quickly to local needs and be closer to the dynamic center of innovation.
- Large e-mobility offensive planned: By 2027, VW plans to introduce more than 20 new electric and hybrid models specifically for the Chinese market. However, it remains unclear whether this will be sufficient given the intense competition.
Impacts on the German Automotive Industry
The increasing competition from Chinese manufacturers leads to:
- Declining sales figures for German brands in one of the most important global markets.
- Pressure on margins due to price wars.
- The necessity for intensive investments in technology (especially software/AI) to maintain competitiveness.
These developments could indirectly also have negative impacts on Volkswagen’s stock price, as declining revenues or margins as well as a loss of market power can unsettle investors.
Summary: The German automotive industry is struggling with growing competition from China, especially in the field of electric mobility. While traditional German manufacturers like Volkswagen aim to strengthen their presence through product offensives and shift development activities to China, they are still continuously losing market shares to innovative domestic providers like BYD or Geely. Technological advances, particularly in autonomous driving, further intensify this competition – a challenge with direct consequences for revenue development and stock valuation of large German car manufacturers.