VOLKSWAGEN AG (VW) must maintain its focus on China to continue being one of the world’s leading automakers — no matter who its chief executive is — according to the person who’s led the company’s operations in the nation since 2019.

Stephan Wollenstein, who first came to China in 2004 and will step down as VW China’s CEO at the end of this month, said he’s witnessed a “fundamental paradigm shift” in the auto industry, which has forced global carmakers, including VW, to focus on China, now the world’s biggest auto market.

VW has a “pretty solid projection” that China’s auto sales will grow to 28 million to 30 million by 2030, accounting for about 30%-35% of the global auto market, Wollenstein said.

China is a key market for VW, accounting for roughly 40% of its global deliveries in the first quarter. The company employs more than 90,000 people in the country and operates over 40 vehicle and components factories along with partners.

After shipping a record 4.23 million vehicles in China in 2019, VW’s sales slid to 3.3 million in 2021 as the pandemic took a toll. Deliveries have continued on that downward trend, falling 20% to 1.47 million in the first half of this year as COVID outbreaks in Shanghai and Chang- chun disrupted production.

Nevertheless, the company is sticking to its annual sales target of 3.8 million as pent-up demand drives a rebound in sales.

The changing of the guard at VW’s China unit comes amid upheaval at head office, with Herbert Diess last week replaced as CEO by Porsche chief Oliver Blume in an abrupt shake-up. Diess has called China the company’s “second home market,” saying VW’s business in the country generates more than 4 billion euros (US$4.2 billion) in profit every year.

The global auto market has changed massively during Wollenstein’s 14 years in China, he said. The nation is now “the powerhouse of the next generation of automotive trends” including electric vehicles (EVs) and connected and intelligent cars, he said.

“If you’re not in China and if you don’t cope with China’s speed and treat China specifically, I have my doubts that you will be a leading manufacturer in the next 5-to-10 years,” he said.

To that end, VW is realigning its China management, led by incoming CEO Ralf Brandstaetter, to give it more autonomy and streamline decision making.

China’s consumers are being spoiled for choice, particularly in EVs, from upstarts Nio Inc. and Xpeng Inc. to BYD Co. and EV pioneer Tesla Inc.

(SD-Agencies)