Czech carmaker Skoda, part of the Volkswagen Group, will officially exit China by mid-year, underscoring the challenges foreign brands face amid fierce competition in the world’s largest auto market.
Struggling to keep pace with China’s rapid shift toward electric vehicles (EVs), Skoda will withdraw from the market by mid-2026, Reuters reported Wednesday, citing the company. Before this decision, last year, the brand considered using SAIC’s PHEV technology for its Chinese models.
Skoda first entered the Chinese market in 2005 through a partnership with SAIC Volkswagen, officially launching its brand in 2006. Its journey of localisation began with the debut of its first domestically produced model, the Octavia, in 2007. Positioned as an “affordable German car” offering high cost-performance, Skoda quickly gained traction, reaching its sales zenith in 2018 with 341,000 deliveries.
At its peak, China was Skoda’s largest single market globally, supported by a dealer network of over 500 outlets and a diverse product lineup, including popular sedans and SUVs such as the Octavia, Superb, and Kodiaq.
However, the period following its 2018 peak saw a dramatic downturn in Skoda’s fortunes in China. Sales plummeted to 15,000 units in 2025, a staggering 95% drop from its peak. This sharp decline reduced its market share to less than 0.1% and led to a significant contraction of its sales channels.
Many of its remaining dealerships were integrated into SAIC Volkswagen showrooms as “shop-in-shop” formats, effectively eroding the brand’s independent operational capacity. It’s quite strange that Skoda, which has been doing very well recently in Europe with its new fully electric models, can’t persuade Chinese customers anymore.
China to end by mid-2026, focus on India and Southeast Asia
As foreign automakers face intense competition from rising local brands, Skoda’s sales thus dwindled to just 15,000 units last year. “The company will continue to sell Skoda models in the Chinese market in collaboration with a regional partner until mid-2026,” Skoda said in a statement. After-sales services for Skoda vehicles will continue to be provided in China, it added.
As part of a strategic repositioning to optimize its global operations, Skoda said it intends to strengthen its presence in India and Southeast Asia. The automaker already saw sales growth in these emerging Asian markets in 2025.
Tough years for VW Group
Parent company Volkswagen has endured a tough few years in China, as legacy automakers continue to struggle in a tech-driven EV market. Local brands BYD and Geely have overtaken the German company in overall sales, ending its years-long dominance in the country.
Unlike Skoda’s full retreat, Volkswagen and its luxury subsidiary Audi hope to win back lost ground in China through a raft of new product launches. The ID.UNYX 08, the first jointly developed model between Volkswagen and Xpeng, has already entered mass production in China.
On Wednesday, Audi began pre-sales in China for the A6L e-tron, a mid- to large-size luxury electric sedan designed to boost its EV sales in the world’s biggest auto market. Also, the first AUDI models, aimed particularly at the Chinese market, are being introduced there.
