(Yicai) March 12 -- Volkswagen Group expects its share of the Chinese market to shrink further this year after the German carmaker’s sales tumbled in the world's largest auto market last year.

Volkswagen’s deliveries in China fell 10 percent in 2024, accompanied by a 2 percentage point drop in market share, Arnaud Anzitz, the firm’s chief financial and chief operating officer, said on a conference call with analysts yesterday following the release of its annual earnings report. That decline contributed to a 3.5 percent drop in global sales to about 9 million.

The Wolfsburg-based company plans to stabilize its position in China by late 2025 and aims to reverse the downward trend next year, once key initiatives take full effect.

“You should expect another year of potential market share decline,” Anzitz said. “We will give up some more share before reengaging in 2026 when we have all the stuff in place, a much better cost base on our platforms, technology, in-car infotainment.”

Net profit plunged 31 percent to EUR12.4 billion (USD13.5 billion) in the 12 months ended Dec. 31 due to restructuring expenses and challenges in key markets, particularly in China, according to its financial report. Revenue edged up 0.7 percent to EUR325 billion (USD354.4 billion).

Sales are expected to jump by as much as 5 percent to 9.5 million worldwide this year, Volkswagen noted. Return on sales will likely be between 5.5 percent and 6.5 percent, though it predicts "clearly weaker first quarter in terms of margin and subsequently cash flow."

While Volkswagen's global sales of battery electric vehicles fell 3 percent to 745,000 in 2024, it expects "strong growth" in BEV sales for a 10 percent to 14 percent global share this year.

Despite the concerning drop in profit, Volkswagen "continues to earn money in China, thanks to our strong position in the combustion engine business," Chief Executive Oliver Blumer said on the call. "This allows us to continue to invest in new models and technologies and enhance our competitiveness."

Volkswagen must strictly execute its strategic approach to address market challenges in China, Blumer noted, highlighting the company's ‘In China for China’ strategy.

The strategy includes partnerships with XPeng Motors, Horizon Robotics, Thunder Software, and other local tech firms, accelerating development cycles to match "China speed" with a targeted 30 percent reduction in engineering time and 40 percent in material costs, and a new product offensive that will "reach its full force in 2026 and 2027," Blumer said.

These are "all crucial milestones on our way to achieve a leading position in the era of intelligent connected vehicles,” he noted.

Volkswagen will showcase its renewed commitment to the Chinese market at the Shanghai Auto Show next month, where its brands will present "their strong local product innovation for the world's largest automotive market," Blumer said.

Editor: Martin Kadiev