(Yicai) Nov. 5 -- China is a pivotal market for Volkswagen Group, Chairman and Chief Executive of its China business Ralf Brandstätter said today. The German auto giant will release 40 new models in China by 2027, and over 20 will be new energy vehicles, he said.

China has become Volkswagen's second home 40 years after the Wolfsburg-based company first entered the market, he said, and the firm has been making plans based on its ‘In China, for China’ strategy. Brandstätter made the remarks while speaking at the seventh China International Import Expo in Shanghai.

Volkswagen has built a research and development center in Hefei, Anhui province that is its largest outside Germany, Brandstätter noted, adding that the company has begun in-depth cooperation with Chinese new energy vehicles and tech firms such as Xpeng and Horizon Robotics. 

The company has suffered a dip in sales in China in recent years and is under pressure from local rivals such as NEV producer BYD, but Brandstätter said Volkswagen intends to increase its investment in China.

Other overseas auto giants including Toyota Motor, Nissan Motor, BMW Group and Hyundai Motor are also attending the CIIE, which opened today, and have been discussing their Chinese market strategies with the media. Increased investment and expanded cooperation with local firms have been common themes.

Japanese automakers have also been enhancing their research and development efforts in China in recent years. The market ranks first worldwide for the number of  cars sold and has reached a high level in terms of smart technology and electrification, Dong Changzheng, senior executive vice general manager at Toyota China, told Yicai.

As a result, Toyota and its Chinese partners will advance their development of new products and technologies for the local market, Dong said, adding that progress in the Chinese market will also support Toyota’s global tech and development strategy.

Overseas auto brands used to dominate the Chinese market, with local firms lagging far behind, but the move toward electrification and smart technologies has turned the tables. According to recent data from the China Passenger Car Association, local Chinese brands had a combined market share of more than 63 percent last month.

Foreign carmakers have been developing strategies for China similar to Volkswagen's so as to re-gain their competitive edge. Most of them are enhancing local R&D and developing stronger cooperation with firms in the Chinese auto industry chain, as well as increasing their focus on the growing NEV sector. 

Editors: Tang Shihua, Tom Litting