In the final quarter of 2025, Volkswagen Group delivered 610,000 passenger vehicles in China, representing a 7.8% year-over-year decline and pushing its market share down to 11.5%. Chinese automaker Geely recorded 630,000 deliveries over the same period, up 12.4% year-over-year, overtaking Volkswagen for the first time since 2012. This shift underscores escalating competition from domestic brands that now account for 43% of the world’s largest auto market. Volkswagen had led China’s passenger vehicle segment for more than a decade, but rapid growth by electric-vehicle specialists such as BYD and NIO has eroded its traditional stronghold in key urban centers including Shanghai and Guangzhou.

Volkswagen’s China setback coincides with ambitious global electrification targets. The automaker had aimed to sell 3 million battery electric vehicles (BEVs) worldwide in 2025, but China accounted for just 380,000 of these, 18% below internal forecasts. In response, Volkswagen plans to introduce six new China-spec EV models by mid-2026 and allocate €5 billion to local R&D over the next two years. Analysts estimate that unless Volkswagen reverses its share slide, its overall BEV market share in China could fall below 10% by year-end, undermining profit margins projected at 9.5% for the region in 2026.