The premium midsize SUV beat the Toyota Corolla for the title with 267,171 Model Ys sold in the first quarter.
VW China boss Ralf Brandstaetter said the automaker's focus is on profitability, not sales volume or market share in the world's No. 1 market.
The VW Group subsidiary has agreed to give retailers in its home market a fixed commission of 6 percent and a flexible payment of between 1.5 and 2.5 percent.
Auto executives and experts will discuss changes in the retail landscape such as the agency direct-sales model and subscription plans at the Automotive News Europe Congress in Paris on June 13-14.