Volkswagen Group has ramped up its “all in” strategy for China, banking on local development capabilities and a new electric vehicle (EV) architecture to fight back against domestic rivals and regain its leading position in the world’s largest vehicle market.
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The German carmaker’s China operations are now able to design and validate new models without going through approvals from headquarters, reducing development time and costs to respond quickly to local needs.
On Tuesday, the company announced the formation of its Volkswagen Group China Technology Company (VCTC), which could “for the first time in Volkswagen’s history”, support the development and validation of new vehicle platforms “from very early phases outside Germany”, it said in a statement.
“This makes us significantly faster and more efficient because we don’t have to coordinate every single detail over continents and time zones,” said Thomas Ulbrich, chief technology officer of VW China and CEO of VCTC. “We can now run software, hardware and full-vehicle validation processes in parallel, shorten decision loops and bring innovations to maturity much faster.”
Speaking to reporters at VCTC in Hefei, in eastern China’s Anhui province, the CTO added that VW would make its cars safer, more reliable, smarter and more affordable to compete in mainland China, where it had been losing market share to local rivals.
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A dominant player in China’s car market since establishing a joint venture in Shanghai in 1984, Volkswagen was overtaken by BYD in 2023, as its petrol-powered models lost appeal among mainland consumers.