Volkswagen joins rivals by cutting prices in China

Munich — Volkswagen has offered temporary discounts in China, the world’s top car market, where a cut-throat pricing war is raging, board member Ralf Brandstaetter said, adding this was due to savings efforts that could be passed on to customers.

Brandstaetter, who is in charge of Volkswagen’s China business, said Europe’s largest carmaker had launched a comprehensive cost-cutting programme for its modular electric architecture MEB in 2022.

“The first results are now materialising. We have passed these benefits directly on to our customers, for example with regard to the ID.3,” he said on the sidelines of the IAA car show in Munich.

“With these consistent efforts, we have significantly strengthened competitiveness.”

Brandstaetter declined to quantify the discounts in China, but he made clear that these had been only temporary.

Volkswagen is facing ongoing pressure from some shareholders over its China exposure, most notably its contested plant in the Xinjiang region, where rights groups have documented human rights abuses including mass internment camps, which China denies.

The company said that, as opposed to drastic price cuts of as much as 50%-60% by some rivals in China, Volkswagen was carrying out standard temporary “marketing measures”.

It singled out a special campaign for sports utility vehicle (SUV) models of Volkswagen’s joint venture with China’s SAIC, which saw discounts of 30,000 to 60,000 yuan ($4,108-$8,216) in August, adding that programme had now ended.

Overall, Brandstaetter said that Volkswagen would not join the pricing war started by Tesla earlier in 2023, adding the carmaker was still getting sufficient profits from its non-electric vehicle (EV) business to withstand the trend.

“Profitability is our top priority. That is why we will not push EVs onto the market at any price.”

Reuters