I'm LongbridgeAI, I can summarize articles.Volkswagen's ID. UNYX 08, a joint venture with Xpeng, sold only 267 units monthly in its first five months, far below the 3,622 target. This underperformance highlights VW's struggles in China, where market share dropped to 10% and profits fell significantly due to intense competition from cheaper, tech-savvy Chinese rivals like Xiaomi and Zeekr. CEO Ralf Brandstaetter warned of a 20% sector contraction and urged aligning production with reality. Despite this, Wall Street maintains a Moderate Buy rating with significant upside potential.
Volkswagen (VWAPY) (DE:VOW3) struggled to sell its first vehicle built through a partnership with Chinese electric carmaker Xpeng (XPEV), according to Reuters. Data from automotive consultancy ThinkerCar showed the ID. UNYX 08 electric sport utility vehicle sold an average of 267 units per month between its April launch and August. Internal Volkswagen planning documents revealed that Volkswagen originally targeted 3,622 monthly sales for the model throughout 2026.
The low sales numbers come as China represents a central problem for the German carmaker. China once generated nearly 50% of Volkswagen group profits. This figure fell to roughly 10% in recent quarters, pushing Volkswagen into an operational overhaul across its global division.
Chinese Rivals Are Outpacing German Pricing
The ID. UNYX 08 reached dealerships with a starting price of roughly $34,260. Chinese buyers opted for competitor models offering superior technical parts at comparable prices. Xiaomi sold nearly 57,000 units of its YU7 model between April and August, and Zeekr delivered more than 21,000 of its 7X vehicles. ThinkerCar data showed Volkswagen sold only 1,300 UNYX 08 vehicles in that same timeframe.
Pedro Pacheco, vice president of research at Gartner, told Reuters, "Chinese customers ask: Why buy an expensive German car if they can get the technology much cheaper." Bernstein auto analyst Stephen Reitman noted that when Volkswagen showed vehicle designs to market analysts in April 2024, competing Chinese automakers were displaying those exact exterior shapes on showroom floors the following morning.
Volkswagen also limited the distribution reach of the new SUV. Volkswagen sold the vehicle through a smaller network run by its Volkswagen Anhui venture, which counts 166 store locations. Volkswagen avoided using its broader network of 3,000 dealerships operated alongside joint venture partners FAW and SAIC.
Volkswagen China CEO Warns Staff of Market Contraction
Volkswagen China CEO Ralf Brandstaetter sent an internal memo to workers on September 10 outlining operational difficulties in the country. Brandstaetter said the overall passenger vehicle sector in China will shrink by 20% this year, eliminating roughly 4.5 million car sales. He pointed out that industry profit margins dropped to 1.5% as vehicle development timelines fell from seven years down to three.
Brandstaetter stated Volkswagen must "align our production capacities with market realities" to stop financial losses. Data from the China Passenger Car Association showed Volkswagen accounted for one out of every five passenger cars sold in China in 2019. That market share fell to 10% across the first eight months of this year.
Is Volkswagen a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on Volkswagen stock based on five Buys and seven Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average Volkswagen price target of €99.73 per share implies 44% upside potential. (See Volkswagen Stock Forecast).