Volkswagen’s vehicle deliveries in China fell 31.6 percent in the first six months of 2026. The year before, they had already sunk to their lowest level since 2011.
That is the sharpest figure in a long slide for German carmakers in what used to be their richest market. For years China paid a large share of their bills. Now local brands such as BYD and Xiaomi are pricing the Germans out as buyers shift fast to electric vehicles, according to Bloomberg’s June reporting.
Profits take the hit
Volkswagen’s second-quarter numbers, released on July 24, made the pressure concrete. Net profit for the three months to the end of June came in at 1.54 billion euros, down 32.9 percent on a year earlier. A 500-million-euro charge for halting US production of the electric ID.4 played a part, and so did a heavier mix of lower-margin products. The group also cut its annual guidance, saying sales would now be flat or fall by up to three percent, after it had earlier expected growth of up to three percent.
Finance chief Arno Antlitz did not soften it. “We need a fundamental change in our business model,” he told investors, calling the half-year results “another wake-up call for action.”
BMW had already shown the strain. Days before Bloomberg’s June report, the maker of the iX3 sharply lowered its profit expectations, pointing to a downturn in China and shoppers holding on to their money amid worries about inflation tied to the Middle East conflict. Mercedes-Benz Group was weighing cost cuts too, and parts suppliers such as Bosch, Schaeffler and Aumovio were closing sites and shedding staff.
The pressure moves west
Chinese manufacturers are not staying home. BYD, Geely and Chery together took almost 11 percent of the European car market in May, according to the firm Dataforce, up from just under three percent three years earlier. “Chinese competitors not only export their vehicles to Europe, but they also export competitive pressure,” Antlitz said.
Volkswagen’s response is drastic. The idea of cutting jobs at the group has grown from the 50,000 already agreed to a possible 100,000 worldwide, and chief executive Oliver Blume told staff that four plants could close. Powerful labour representatives and the state of Lower Saxony, which holds 20 percent of the voting rights and hosts six Volkswagen plants, have a say on the supervisory board, so the plan faces a fight.
Blume told the company’s annual meeting that the old formula no longer holds. “Developing a ‘world car’ in Germany, producing it in Europe and selling it worldwide: Our business model, which has been successful for decades, no longer works today.” Germany’s carmakers employ some 700,000 people directly.
Sources
- Volkswagen profits down as competition from China heats up (AFP, The Local)
- German carmakers face next round of cutbacks (Bloomberg, The Star)
