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Volkswagen AG Chief Executive Officer Oliver Blume vowed to continue cutting costs as the German automaker charts a new course for China, where it is struggling with poor demand and waning relevance.
Blume appeared at Shanghai’s Tongji University on Tuesday to mark the 40th anniversary of VW’s presence in the country. He told a group of students that the carmaker will push ahead with its “in China, for China” strategy, which prioritizes local technology and cost competitiveness.
“This year has been a very challenging year for the Volkswagen group,” Blume said. “Our plan is to bring more than 30 new models to our markets until 2030. We will use a strong product portfolio to let our customers see the Volkswagen brand’s charm again.”
China’s ultra-competitive autos market and the rapid transition to electric vehicles have caught foreign carmakers such as VW and General Motors Co. flat-footed. The rise of local champions like BYD Co. and an ongoing price war have meant the end of years of healthy sales and profits that legacy manufacturers came to enjoy in China. Elsewhere, slowing demand is forcing VW to consider closing factories in its home market of Germany for the first time.
With VW China Technology Co., VW’s wholly owned division based in Anhui province, the group is aiming to develop a compact automotive platform for the Chinese market that costs 40% less, Blume said. VW is also hoping to speed up the time it takes for new products to come to market by 30% from 2026.
“We’ve realized that in such a price sensitive market as China, you must cut costs,” he said. “This poses a big challenge to our engineering technology development, as well as manufacturing.”
Through VW’s investments in and partnerships with companies like battery maker Gotion High-Tech Co., autonomous driving solutions firm Horizon Robotics Inc. and EV maker Xpeng Inc., the group can innovate its vehicle platforms and brand faster and more effectively, Blume added.
The automaker last month renewed its joint venture contract with state-owned manufacturer SAIC Motor Corp., and Blume said he looked forward to a new beginning. VW will become more nimble and turn to newer drive trains that are popular with Chinese consumers, including plug-in hybrids and range-extended EVs, both of which are powered by batteries and conventional internal combustion engines.
China remains a key market for VW and the group aims to generate €3 billion ($3.2 billion) in operating profit there by 2030 as well as maintain its position as the No. 1 foreign auto brand, Blume said.
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