On April 11, Volkswagen Group announced an investment of 2.5 billion euros on the occasion of its 40th anniversary in China to further expand its production and innovation center in Hefei, implement the strategy of "in China, for China", continuously deepen the localization development process, and make products more targeted to focus on changing customer needs.
Volkswagen (China) Technology Co., Ltd., located in Hefei, is the hub for product localization
While strengthening its local R&D capabilities, the Volkswagen Group will also produce two Volkswagen-branded models jointly developed with Xpeng Motors in Hefei, the first of which is a midsize SUV and is scheduled to start production in 2026. The new models will accelerate the electrification of the Group's product portfolio in China. By 2030, the Group's brands will offer more than 30 BEVs in the Chinese market.
As one of the earliest and most successful international partners of China's automotive industry, the Volkswagen Group has been working with China's automotive industry for 40 years. In 1978, the Volkswagen Group began its ties with China. In 1984, SAIC Volkswagen Automotive Co., Ltd., the Group's first joint venture in China, was established. In 1991, FAW-Volkswagen Automotive Co., Ltd. was established in Changchun. Over the past 40 years, the Santana and Jetta models have brought convenient personal mobility to tens of millions of Chinese customers, and the subsequent launch of the first batch of models exclusive to the Chinese market, such as the Lavida and Sutar, has also reached millions of sales.
SAIC Volkswagen's first model, the Volkswagen Santana
The first Jetta produced by FAW-Volkswagen
Since 2017, the Volkswagen Group has been pursuing an electrification strategy in the Chinese market. In the same year, Volkswagen Anhui and JAC jointly established the Group's first joint venture focusing on electric vehicles in China, Volkswagen Anhui, which is the first joint venture of Volkswagen Group in China to control vehicles. The Volkswagen Group's presence in Hefei encompasses production, R&D and purchasing, and will be expanded into a strategic innovation center for the Group "in China, for China".
By strengthening its R&D capabilities and partnering with local Chinese high-tech companies, as well as partnering with Chinese automakers such as Xpeng and SAIC, the Volkswagen Group continues to introduce new electric models, expand its product portfolio, and bring cutting-edge local technologies to its brand models at "China speed". In this way, the product development cycle will be shortened by more than 30%, and at the same time, the needs of Chinese customers will be more targeted and met.
The first model jointly developed by Volkswagen and Xpeng will go into production in 2026
Over the past 40 years, the Volkswagen Group has established a unique competitive advantage in the fast-growing Chinese market. The first is the huge user base. About 50 million Chinese car owners drive models from Volkswagen Group brands. Consumer loyalty of brands such as Audi and Volkswagen exceeds the market average.
The second is a strong dealer network. The Volkswagen Group has more than 3,500 dealers in China, forming a strong link between the Group's brands and customers. Group brands such as Volkswagen, Audi, Porsche, Skoda, Bentley and Lamborghini sell around 160 models in China, and the Ducati brand also sells 10 motorcycle models in the Chinese market.
Again, it is a huge manufacturing and R&D system. With 39 plants in China, the Volkswagen Group is an integral part of the country's automotive industry. Building on this, the Group has established strong partnerships with Chinese high-tech companies, including working with Horizon Robotics to develop autonomous driving features, co-developing infotainment systems with Thunderda, and working with Shanghai Muchuan Industrial Design in the field of user experience. With more than 90,000 employees in China, the Volkswagen Group is the largest European company in China.