US & China: Inside Volkswagen's Regional Strategies

Volkswagen Group says it saw growth around the world in the first half of 2026, except for in China and North America. 

It delivered 4.13 million vehicles, a 6% decrease from the previous year due to a decline of 26% in China and 7.4% in the US. 

Despite this, the Group saw growth in Europe and South America of 3.5% and 8.3% respectively. 

Marco Schubert, Member of Volkswagen Group's Extended Executive Committee for Sales, says: “The Volkswagen Group grew by around 2% overall in the first half of the year outside of China. We continued to gain ground, particularly in South America and Europe. 

"The situation in China remains challenging, where we were unable to escape a significant total market decline of around 20% - despite initial positive momentum from our newly introduced, locally developed electric vehicles."

Volkswagen in the US

The Group attributes its North American decline to tariffs and changes in regulations. 

Sales of its battery electric vehicles (BEVs) in the country fell by 68.8%, from 31,300 units in H1 2025 to just 9,800. 

Volkswagen is not alone in this decrease, however. The US automotive market as a whole fell by 2.2% in H1 2026, according to Kelley Blue Book data, and the EV market fell even further.

The Group has put significant focus on its BEVs, making up a 21% share of its Western European deliveries. 

The nationwide EV decline follows the cancellation of the US$7,500 new EV tax credit in September 2025.

In Q3 of 2025, EV purchases grew by 40% as people looked to make use of the incentive before it was cancelled.

The first half of 2026 saw a nearly 24% decline in EV sales compared to the same period in 2025. 

Just five of Volkswagen Group's 111 production facilities are located in the US, leaving the company vulnerable to tariffs.

Volkswagen in China

Volkswagen Group saw its biggest H1 decline of 26% in China, where it says it has 39 plants.

It completed 424,300 deliveries, compared to 669,700 in H1 of 2025. Of these, 21,500 were BEVs, compared to 33,400 the year before. 

According to data from the China Association of Automobile Manufacturers (CAAM), overall automotive sales in the country saw a 4.1% decline in H1 of 2026 compared to the same period in the year before. 

Domestic passenger retail saw a 20% decline compared to the year before, according to the China Passenger Car Association (CPCA). 

Chinese consumers are often choosing new energy vehicles (NEVs) over internal combustion engine vehicles. NEVs accounted for 49.6% of the market in H1, CAAM data shows.

Tech-heavy domestic brands like BYD, Geely and Chery are offering deep discounts to win over consumers, which legacy foreign automakers can struggle to compete with.

China has also been scaling back its EV incentives, with the expiration of purchase tax exemptions on electric cars and the reduction of trade-in subsidies for greener vehicles disrupting the market in early 2026.

In China, for China

To take back the Chinese market, Volkswagen Group launched its 'In China, for China' strategy in 2023.

This strategy aims to drive localisation and align its products with the high-tech vehicles Chinese consumers are looking for. 

For example, it established its largest R&D hub outside of Germany in Hefei, the Volkswagen Group China Technology Company. 

Some vehicles are being jointly developed with Chinese manufacturers, including the ID.UNYX 08 made with XPENG.