China — Volkswagen expects the country’s passenger-car market to contract by about 20% in 2026, according to its top executive in China, highlighting the difficulties facing global automakers in the world’s largest auto market.
Volkswagen China chief Ralf Brandstaetter gave the forecast on Tuesday as the German automaker contends with declining deliveries and narrowing profit margins in the country.
Speaking at an industry summit, Brandstaetter said the current contraction in China’s domestic passenger-car market was comparable with the impact of the COVID-19 pandemic.
The outlook adds to the pressure on Volkswagen as it competes in an increasingly challenging Chinese automotive market.
China’s domestic car sales fell for an eleventh straight month in August, while vehicle exports from the country remained strong, according to the Reuters report.
The divergent trends reflect a changing automotive landscape in China, where weaker domestic demand contrasts with continued substantial export activity by manufacturers.
China has traditionally been one of Volkswagen’s most important markets, making the decline in deliveries and squeeze on margins a significant challenge for the German automaker as it competes with local manufacturers.
The weakening market comes during a broader adjustment in China’s automotive sector. Domestic brands have increased their presence, while established international automakers face growing pressure to sustain both sales and profitability.
Brandstaetter’s 20% forecast indicates the scale of the contraction Volkswagen expects across China’s passenger-car market during 2026.
For Volkswagen, weaker market conditions could intensify competition for customers as automakers seek to defend market share while contending with lower sales volumes and tighter margins.
Meanwhile, the continued strength of Chinese vehicle exports provides a contrasting trend for the country’s automotive industry. Manufacturers are increasingly looking beyond domestic buyers for opportunities in overseas markets.
Volkswagen’s outlook highlights the significance of slowing passenger-car demand in China for global automakers operating in the country as the industry continues to adjust to weaker domestic sales.
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