Volkswagen Falls to Third Place in China's Competitive Auto Market

Volkswagen AG VWAGY slipped to third place in China’s auto market last year after being surpassed by Geely Automobile Holdings Limited GELHY, marking another setback for the German carmaker in the world’s largest vehicle market. Per Reuters, Volkswagen had already lost its decade of dominance to BYD Company Limited BYDDY in 2024. The shift highlights the growing pressure on traditional foreign automakers as domestic Chinese brands continue to strengthen their position.Volkswagen’s two long-standing joint ventures in China, formed with state-owned FAW Group and SAIC Motor, together accounted for a 10.9% share of retail vehicle sales. This represented a decline from the 12.2% market share recorded in 2024, per China Passenger Car Association data. In contrast, Geely Auto significantly expanded its footprint in the domestic market, increasing its share to 11% from 7.7% in 2025. BYD, while still the market leader, also saw its share edge down to 14.7% from 16.2%.The broader trend reflects how established global automakers, such as Volkswagen, General Motors and Toyota, have steadily lost ground to Chinese competitors. A key factor behind this shift has been the slower pace at which foreign brands have transitioned to electric vehicles, even as Chinese consumers increasingly favor EVs, encouraged by government subsidies and policy support.In response, Volkswagen is stepping up its localization efforts in China. Beyond expanding its cooperation with Xpeng to jointly develop electronic and electrical architectures for additional models, the company plans to work with Horizon Robotics to create its first internally developed chip for next-generation smart vehicles tailored for the Chinese market. It is also exploring opportunities to export China-developed and China-manufactured vehicles to overseas markets, mirroring strategies pursued by Chinese automakers like BYD as they seek growth beyond a slowing domestic market.Globally, Volkswagen delivered approximately 4.73 million vehicles last year. Demand for electric vehicles remains resilient, as Volkswagen delivered around 382,000 fully electric vehicles globally in 2025, representing a marginal decline of 0.2%. As a result, battery-electric models accounted for 8.1% of the company’s total vehicle deliveries during the year.BYD delivered 4.6 million vehicles in 2025, which increased 7.7% from 2024 and achieved its full-year sales target. Sales of BYD were evenly split between fully electric vehicles and plug-in hybrids, with nearly 2.3 million units sold in each category. However, this milestone comes as the Chinese auto market faces a difficult year ahead.For the full year, Geely sold 3.02 million vehicles, meeting its target of 3 million units. Geely has set a 2026 sales goal of 3.45 million vehicles, implying growth of about 14% from 2025 levels. VWAGY has a Zacks Rank #5 (Strong Sell) at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Just Released: Zacks Top 10 Stocks for 2026Hurry – you can still get in early on our 10 top tickers for 2026. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful.From inception in 2012 through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2026. You can still be among the first to see these just-released stocks with enormous potential.See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Volkswagen AG Unsponsored ADR (VWAGY): Free Stock Analysis Report Byd Co., Ltd. (BYDDY): Free Stock Analysis Report Geely Automobile Holdings Ltd. (GELHY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks