BEIJING, March 13 (Reuters) - Volkswagen (VOWG.DE) reclaimed car sales dominance in China, the world’s largest auto market, in the first two months of 2026 when Toyota (7203.T) also regained ground, both overtaking local electric vehicle champion BYD (002594.SZ) (1211.HK) amid fading subsidies for greener cars.
VW’s Chinese joint ventures with FAW and SAIC (600104.SS) held a combined 13.9% share of the country’s passenger vehicle market in sales terms, followed by Geely (0175.HK) ’s 13.8% and a combined 7.8% from Toyota’s JVs with GAC and FAW, data from the China Passenger Car Association showed.
The legacy automakers’ comeback in the market where they have been struggling to catch up with local rivals in EVs comes as purchase tax exemptions on electric cars expire and Beijing scales back subsidies for trading in EVs.
As subsidies fade, hybrid EVs that Toyota specialises in were shown to have steered some consumers away from PHEVs, said Cui Dongshu, secretary-general at CPCA.
Local automakers betting on budget electric and plug-in hybrid vehicles take the biggest hits from the curtailed incentives.
BYD, which unseated VW as the biggest carmaker in China by sales in 2024 and held onto the crown last year, fell to fourth place with 7.1% market share in the January-February period when its overall sales posted the biggest drop since the pandemic.
The biggest competitor to Tesla (TSLA.O) unveiled its first major battery upgrade in six years last week to revive sales in its home market where a shift toward a value-driven auto market away from bruising price wars is well in motion.
VW has begun mass production of its first model co-developed with Chinese partner Xpeng (9868.HK) , the German automaker said on Friday. It is set to launch more than 20 new EV models in China this year alone.

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- Volkswagen regained car sales dominance in China in early 2026, capturing a 13.9% market share.  
- This resurgence comes amid declining subsidies for electric vehicles, allowing legacy automakers like Toyota to regain their presence.  
- BYD, previously the top seller, fell to fourth place with a 7.1% share due to significant sales declines as the market shifts away from budget electric vehicles.

Reuters

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Volkswagen reclaims top spot in China car sales, BYD falls to fourth as EV subsidies fade