We are witnessing an outstanding economic comeback. In late winter, the whole of China was effectively in lockdown. Now, by early summer, we can look forward to a return to normal in the country’s car market. In April, Volkswagen Group China’s deliveries were even able to grow compared to the previous year.

This comeback was made possible by a joint effort from customers, government and the automotive industry. We have left the deepest valleys behind us, and are now on the climb to the peaks again. After a total market downturn of 80% in February, 40% in March, and an April around 10% down, we are returning to normality. However, the big question is if the second half of the year will make up the dent of loss in the first half. Should the current trend continue, we at Volkswagen Group China can be cautiously optimistic and forecast a yearly result that is not so far away from our original plan. Looking back at the beginning of the year, this might seem like a miracle, but it was made possible by an incredible team effort.

Demand is rising again, and we are currently witnessing some noteworthy observations in customer behavior: First to consider is that customers who were unable to buy a car over the last few months are now eagerly visiting our dealers. Furthermore, we have seen interest from a new kind of customer, those keen to own a personal vehicle to escape the risks of infection on public transport – many of them first time car buyers, a group accounting for 60% of customers in China. This could especially benefit our young brand JETTA. Another interesting result is that wealthy customers are coming back to the market faster, resulting in a faster comeback of premium and luxury segments. As a result, I am happy to see Bentley with growth in the first quarter compared to last year, and the same with Porsche’s and Audi’s current positive performances. Entry level and high-end models are the winners in the first weeks of market return.

But even with promising sales, the impact of Covid-19 will certainly change the Chinese car market in general. Here are three of my predictions:

• Though perhaps a bitter pill to swallow, the crisis will encourage a shake-out of the industry. An automotive market with over 100 brands, even with a huge size such as China’s, is not healthy. We will likely look back on this period as driving consolidation, which will probably benefit the entire market as a whole on its way to achieving better standards for technology and customer service. Brands with high quality products and 100% customer orientation will be resistant to the shake-out, while if those are not the focus of a brand, said brand will struggle.
• Following this logic, we will see the renaissance of strong brands. In times of crisis, a strong image, consistent quality and dedicated customer orientation will help to convince buyers. With the Group’s rich history spanning over 35 years in China and a portfolio of exceptionally strong brands to call our own, we remain a priority choice for customers in China. This is also visible in our performance, as we have been outperforming the total market every single month this year, further strengthening our Group’s market share and cementing our market leading position.
• The lockdown will have a catalyst-like effect on the long-term change towards digitization of sales, services and marketing in our industry. We have to make the connection with customers, not the other way around, and become a part of their everyday digital ecosystem. Establishing online purchasing processes, offering all-connected cars which double as digital companions, such as the coming Volkswagen ID. models, or providing online information and events for customers -these developments are important and already taking place at Volkswagen. We have intensified our online-offline hybrid sales model over the last few months and found solutions for digital communications with customers and media. One example is our specially built live-streaming studio at FAW-Volkswagen.

China is currently the worldwide role model for renewing vitality in automotive markets around the world and it will stabilize Volkswagen Group’s business while operations in Europe are still slowly coming back. My message is one of cautious optimism. I hope China’s trend will continue, but there are possible hurdles on our way to the mountain top again. It would be wrong to think that daily life is going to return to completely normal soon. We have to maintain consistency in our business ramp-up strategy, with international exchange, and especially with our prevention measures. One thing hasn’t changed among all of this: With our long-term confidence, we are still seeing China as the coming powerhouse of the automobile world.