Volkswagen Group has forecast that pressure on China's automotive market will persist through the remainder of this year, with no near-term sales recovery expected amid weakening demand and shifts in economic and trade policies.
In a statement from Beijing, the group said China's car market faces mounting challenges, adding that it expects total new vehicle sales to fall below 21 million units this year. It said it intends to adjust its operational and investment plans accordingly.
The forecast follows data from the China Passenger Car Association showing that vehicle sales declined 19.5% during the first five months of the year, reflecting continued weakness in consumer demand in the world's largest automotive market.
Volkswagen attributed the slowdown to several factors, including changes in subsidy and tax policies, rising fuel prices, and intense price competition between domestic and international manufacturers, all of which have weighed on consumer confidence.
Despite these pressures, the group said China's electric vehicle market continues to record steady growth, supported by rising demand for low-emission vehicles and an accelerating shift toward clean energy.
Volkswagen added that its new strategy, focused on expanding production of electric and hybrid vehicles, positions it better to navigate current challenges and enhances its ability to adapt to structural shifts in the Chinese market.