Volkswagen Sales Drop in Europe, But China Offers EV Boost

While sales in Europe are down by around a fifth in the first half of 2022, sales in China are set to rise by more than twice that. Volkswagen is ramping up its electrification efforts in China to maintain its lead in its largest market. It recently released figures for June indicating that it had delivered the fewest number of new passenger cars since 1996. The reason for this drop has been attributed to supply chain bottlenecks, inflation, and the coronavirus, two of the main culprits of the decline in the auto industry.

However, the Chinese auto industry has been overachieving the CAFC target in 2018, and while some international joint venture companies and imported brands missed their targets in 2018, their credits from previous years offset the negative numbers. This year, the CAFC will start enforcing the new EV credits quota system, and stricter regulations are expected to support the rapid adoption of EVs in the auto industry. Meanwhile, international OEMs should catch up with the rapid EV growth, or they may suffer from less government purchases.

A recent report from the Automotive Research Institute (ARDA) shows that despite the Covid lockdowns in China, Volkswagen sales are expected to drop in Europe. In Europe, new passenger car registrations dropped by 14.3% in the first half of 2022, and in the UK, these numbers were down by 11.9%. Meanwhile, in China, the government has announced plans to mandate ride-hailing companies to convert 40% of their fleets to electric by 2026.

The Chinese EV market is growing fast, with the country accounting for 51 percent of the global market in 2021. In fact, China will surpass Europe in 2022, with the region’s market leader BYD surpassing Tesla’s production in 2022. While Europe is struggling to adapt to the new rules, China’s EV market is expected to continue growing rapidly.

While Volkswagen is experiencing a decline in its European sales, the Chinese EV market is offering a major boost for the German brand. In fact, it’s reported that Volkswagen has received more than two million orders in China in the first half of 2018.