Volkswagen Group expects a recovery in China’s passenger car market growth this year once supply-chain stresses and a wave of COVID infections following the country's pandemic reopening ease.
The Chinese market is set to grow between 4 percent and 5 percent this year to 23 million vehicles, said Ralf Brandstaetter, VW's head of China operations, accelerating from a rise of 1.6 percent last year.
While demand indicators are pointing up, China is beset by a massive spike in infections following the relaxation of its COVID-Zero policy.
"The first quarter will certainly be a bit more difficult in comparison to the rest of the year," Brandstaetter told journalists in Berlin. "This means that in the next few weeks, we shouldn’t allow ourselves to be influenced too much by the effects that are still there now."
While growth is set to accelerate, Western carmakers are losing ground to local manufacturers offering cheaper models geared to local tastes. Tesla already cut prices prices in China in October.
Brandstaetter declined to say whether VWwould follow suit.
VW has long dominated the combustion engine car market in China, but lags domestic competitors on electric vehicles -- most notably BYD, which sold 40,046 EVs between Jan. 1-8 compared to VW brand's 1,962, according to Chinese brokerage CMBI.
Last year, VW's sales in its most important market fell 3.6 percent to 2.2 million vehicles during the country's tough COVID measures that shuttered 70 percent of its showrooms at times.
Skoda EVs, smaller VW
VW Group is expanding its EV lineup in China over the next two years with the Audi Q4 e-tron and the VW ID7 sedan. It plans a new model below the VW ID4 such as a smaller sedan or SUV, though not the entry-level ID2 planned for Europe, Brandstaetter said.
The automaker also weighing whether to offer electric Skoda models as the brand currently has a small presence in the country, Brandstaetter said.