Volkswagen’s China deliveries fall as local EV rivals surge

Volkswagen’s deliveries in China fell 15% in the first quarter of 2026 as local electric vehicle makers kept widening their lead on price and software. The German group sold 2.05 million vehicles worldwide in the period, down 4%, and said new locally developed electric models in China should help rebuild momentum later in the year.

The numbers show how quickly the balance of power in the auto market has shifted in China, where domestic EV brands now set the pace that Western incumbents must chase. Volkswagen said in April that it was launching the next phase of its transformation in China and aimed to reach cost parity with local competition in the compact-car segment by 2026, a target that reflects years of pressure from Chinese rivals that have undercut legacy brands with cheaper, more sophisticated products.

The strain is visible across the group. Volkswagen’s first-quarter operating result was €2.5 billion, down 14.3% from a year earlier, even as the company said it cut overhead costs by nearly €1 billion and generated €2 billion in net cash flow. Under chief executive Oliver Blume and finance chief Arno Antlitz, the company has also said it is reducing complexity, overhead and decision-making layers as tariffs in the United States and weaker demand in China squeeze margins.

Volkswagen’s 2025 deliveries finished at 8.98 million vehicles, down 0.5% from 2024, leaving the group roughly flat at the top line but far more exposed to the contest in China than its global scale suggests. The first quarter brought another reminder of that exposure: deliveries fell 15% in China and 13% in North America, showing pressure in two of the company’s most important markets at once.

That pressure is now feeding into broader restructuring plans. A sweeping overhaul under discussion could cut model lines, reduce capacity and affect around 100,000 jobs, a sign that China’s EV shakeout is no longer just a local market story. For Volkswagen, the fight in Beijing, Hefei and Wolfsburg is now about whether a century-old industrial model can adapt fast enough to compete with Chinese companies that have changed the rules on cost, technology and scale.