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%.
