Volkswagen ID.4 crossover off to a slow start in China

Sales of the Volkswagen ID.4 in China is off to a worryingly sluggish start, company sources told Reuters. In May, the combined sales for the ID.4 X and ID.4 Crozz amounted to 1,213 units, which is down about 200 units from April, according to data derived from automotive consultancy LMC.

Four people familiar with the matter said that performance is falling far short of Volkswagen’s initial hopes, which was to sell about 50,000 to 60,000 units of the fully electric models this year. Those goals now seem unrealistic. To make matters worse, both the VW-SAIC and VW-FAW EV plants are running below 10% of production capacity. Each plant has the capacity to build 300,000 cars annually.

What is the cause of the slow start? Apparently, the sources said the ID.4 is lacking in smart tech features, and it is facing fierce competition from Tesla and other local EV makers. “Sales so far are behind our earlier expectations. We’ve had to dial down production plans for the ID.4 again and again,” said the person who requested anonymity. “This is not healthy, but at the moment customers are not coming to buy them.”

Recently, at a shopping mall in western Shanghai last week, 50-year-old engineer David Qian was looking to buy his wife an EV but that he was not drawn to the ID.4 X, which starts at just under 200,000 yuan (RM129k). “The car looks okay but I know it is not smart enough,” said Qian. He himself owns a Tesla Model 3 and enthuses about its advanced driver assist systems.

Unlike Tesla models and a growing number of China-made EV cars, the ID.4 cannot park itself and does not offer advanced self-driving features or advanced voice-controlled functions. Shanghai-based AutoForesight consultancy head, Yale Zhang said “Chinese consumers value the sense of technology and science fiction of electric vehicles, and brand loyalty has always been low which is completely different from the European market.”

By contrast, the ID.4 is the top-selling electric vehicle in Europe in the two months after its launch. A JATO Dynamics report showed that Volkswagen sold 12,101 units of the car across the continent. However, Zhang said the ID.4 faces “too much competition and they are all new models with a strong tech sense.” VW said it will offer new software updates in the future to appease potential buyers.

Besides that, there are also problems with Volkswagen’s sales network. Instead of relying on its 2,000-strong dealer network, VW has shifted to an agency sales model for its ID cars, which are typically located in shopping malls. The problem here is that prices are fixed, and there is no inventory for showroom operators. As of end-May, there are 12 ID stores in China, though Volkswagen plans to grow that to more than 100 stores by the end of the year.

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