Volkswagen AG issued a pessimistic outlook for the Chinese automotive market through the remainder of 2026. The company anticipates no recovery in the second half of the year. Total market sales for new vehicles are projected to fall below 21 million units.
Volkswagen Group China is currently adjusting its strategic plans to address the market pressure. This announcement follows a 19.5% drop in sales during the first five months of the year, according to the China Passenger Car Association.
Management attributed the market weakness to shifting tax policies and changes in government subsidies. Rising fuel prices and persistent price competition have further weakened consumer confidence and demand.
Despite the challenging environment, Volkswagen reported that its fully electric vehicle sales continue to grow steadily.