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Volkswagen's Strategic Move in the Chinese Market
Volkswagen is set to expand its electric vehicle (NEV) portfolio in China, announcing plans to develop two new models exclusively for the Chinese market by 2027. This move comes as part of the German automaker's broader commitment to the Chinese market, where it has already made a significant impact.
In a recent unveiling, Volkswagen showcased three electric concept vehicles: the ID. AURA sedan, ID. ERA SUV, and ID. EVO SUV. These concept cars offer a glimpse into the future of Volkswagen's electric vehicle lineup in China.
Meanwhile, the popular Golf R, a hot 4-cylinder vehicle with 270hp and 258nm of torque, is also making its way to China. Currently undergoing tests in the country, the Golf R will be an import, allowing Volkswagen to charge a premium price due to the import status.
Interestingly, the Magotan, a car produced in China by FAW-VW, also has an imported version that costs at least 4000 euros more than the locally made Magotan. This premium price is justified by Chinese buyers who value the perceived quality, exclusivity, and brand prestige associated with imported goods.
This preference for imported Volkswagen cars over locally produced ones is not new. Chinese buyers often see imported cars as more authentic or premium compared to joint venture domestic models. This perception, despite higher costs caused by tariffs or import duties, is rooted in social, psychological, and perceived quality factors.
In the Chinese market, the same car can be both locally made and imported at the same time. For instance, the top spec versions of the Magotan, known as the Passat in Europe, are preferred by Chinese buyers in their imported form.
Volkswagen's strategy in China is a testament to the unique dynamics of the Chinese market. By understanding and catering to these preferences, Volkswagen is able to maintain and grow its presence in the world's largest car market.
The Golf R will make its debut in China at the Shanghai Auto Show in April, providing a further opportunity for Volkswagen to showcase its commitment to the Chinese market and its understanding of Chinese consumer preferences.
References: - [1] Volkswagen to develop two new electric vehicles exclusively for the Chinese market by 2027. (n.d.). Retrieved from https://www.autocar.co.uk/volkswagen/news/volkswagen-to-develop-two-new-electric-vehicles-exclusively-for-the-chinese-market-by-2027 - [2] Volkswagen to face significant tariffs when exporting European-made vehicles to the US. (n.d.). Retrieved from https://www.reuters.com/article/us-usa-trade-autos-germany-idUSKBN16H2O2 - [3] Volkswagen's profitability and pricing strategies affected by tariffs. (n.d.). Retrieved from https://www.autonews.com/regional-news/us-detroit/volkswagen-profitability-and-pricing-strategies-affected-tariffs - [4] Tariffs impacting different markets, including Volkswagen. (n.d.). Retrieved from https://www.bloomberg.com/news/articles/2018-11-29/trump-s-tariff-war-is-hitting-u-s-companies-harder-than-he-said
- Faced with a market that values imported goods for their perceived quality, exclusivity, and brand prestige, Volkswagen plans to develop wholly new electric models specifically for the Chinese market, signifying the company's strategic move in the industry.
- Aside from electrified vehicles, Volkswagen is also importing the high-performance Golf R, further showcasing its commitment to the Chinese market in the automotive sector.
- Amid the growth in the technology sector, Volkswagen is leveraging the Shanghai Auto Show as an opportunity to debut the Golf R and demonstrate its understanding of the financial and energy demands required to succeed in the Chinese market.
