The Volkswagen Group has announced that it conducting a thorough review of its global operations, with a focus on key markets such as China and Europe. This move comes as the automotive giant works to navigate the complexities of a rapidly evolving market landscape, particularly in electric mobility and digitalisation.
Strengthening Ties in China
Volkswagen has extended its long-standing partnership with SAIC Motor until 2040, reinforcing its commitment to the Chinese market. The renewed agreement, signed in Shanghai, aims to secure a leading market position for SAIC VOLKSWAGEN, focusing on intelligent, fully connected electric vehicles.
Ralf Brandstätter, Member of the Board of Management of Volkswagen AG for China, emphasised the significance of this collaboration. “With the long-term contract extension, we underline the importance of this collaboration and the significance of the Chinese market for the Volkswagen Group,” he said. “We are accelerating the transformation of SAIC VOLKSWAGEN in line with our ‘In China, for China’ strategy on all levels, bringing a new generation of electrified vehicles onto the road by 2026.”
Wang Xiaoqiu, Chairman of SAIC Motor, echoed the sentiment, highlighting the focus on developing new, intelligent electric vehicles. “The aim of the joint venture is to achieve sustainable and steady sales growth and a leading market position,” he stated.
Key Areas of Transformation
The new agreement identifies three key areas for accelerating the transformation of the SAIC VOLKSWAGEN joint venture:
- Product Offensive: By 2030, SAIC VOLKSWAGEN will introduce 18 new models, including eight electric models, three plug-in hybrids, and two range-extender variants. The focus will be on tailoring these vehicles to the needs of the Chinese market.
- Production Network Optimisation: The joint venture will gradually reduce production capacity for internal combustion vehicles, converting sites to produce electric vehicles based on customer demand.
- Decarbonisation Initiatives: SAIC VOLKSWAGEN aims to reduce its CO2 emissions by 25% by 2030, aligning with the Group’s objective of achieving carbon neutrality by 2050.
Long-Term Commitment to Agency Model
Despite potential short-term adjustments, Volkswagen remains committed to its long-term target of a ‘Direct to Customer’ sales model with a Full Agency. The successful Fleet Agency will be scaled and optimised, and the Full Agency for vehicles across all drivetrains will be established in Ireland and Sweden. The CUPRA brand will continue to sell its BEVs in the Agency model.
The review process will involve Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Škoda, and Audi in markets such as France, Germany, Poland, Spain, and the United Kingdom.
For manufacturers, the agency model offers several advantages, including greater control over pricing and discounts, leading to increased margins and improved profitability. Additionally, the agency model reduces distribution and sales costs and increases sales efficiency by streamlining the sales process across digital and physical channels.
