BEIJING (dpa-AFX) - German automotive giant Volkswagen (VW) is expecting
the next two years in the highly competitive Chinese car market to be
difficult.

'In April, we saw another round of price reductions coming, so this
fierce competition will hold on for the next few years,' VW board
member Ralf Brandstätter said in Beijing ahead of a major upcoming
motor show due to open next week.

Many manufacturers of purely electric cars have significantly damaged
their profit margins in recent years, he said, 'so this leads to a
consolidation of the market.'

He suggested that companies with lower sales volumes, below 100,000
or 150,000 vehicles per year, would not survive the coming
competition.

According to Brandstätter, Volkswagen plans to prepare for fierce
price competition over the next two years and finance the development
of its e-car business in China with sales of combustion-engine
vehicles, which are still going well.

'This means for us two heavy years because we will not make each
volume for any price,' Brandstätter said.

He added that the company may have to accept lower sales figures in
order to maintain pricing, which will likely mean losing market share
in the short term.

Volkswagen plans to be back on a par with the competition in China in
terms of costs and technology beginning in 2026 for entry-level
compact cars, he said.

The costs of the vehicle platforms developed for China are to be
reduced by 40%, he said.

By 2030, the Volkswagen Group, which also includes brands such as
Audi and Porsche as well as Volkswagen, aims to have sold around 4
million vehicles in China, with half of all cars sold electrically
powered.

According to VW, this would correspond to a market share of 15%.


Copyright dpa