SAIC Volkswagen Internal Letter: Three Key Tasks Before the 2026 “Product Year”

An internal letter outlines three urgent tasks—enhancing product competitiveness, optimizing costs, and driving organizational reform—before SAIC Volkswagen’s major 2026 product launch year.

According to Yijian Auto, SAIC Volkswagen General Manager Tao Hailong recently issued an internal letter to middle and senior-level employees on behalf of the Executive Committee.

In the letter, Tao directly confronted the challenge of underperforming financial targets and clearly stated: during the transition period before the arrival of the 2026 “product year,” the company must focus on three critical initiatives—strengthening product competitiveness, optimizing cost structure, and advancing organizational reform—to build a systematic counterattack capability.

Focusing on the Product Portfolio

The year 2026 is viewed as a pivotal “product year” for SAIC Volkswagen, with nearly seven new energy vehicle (NEV) models set to launch. These include two battery-electric vehicles (BEVs) based on the CMP platform, three plug-in hybrid electric vehicles (PHEVs), and two extended-range electric vehicles (EREVs)—a first for the brand.

Leading up to this product surge, the company is also accelerating its smart transformation by partnering with domestic tech suppliers.

For example, the new Pro family models—such as Passat, Tiguan L, and Teramont—feature the IQ.Pilot intelligent driving system, co-developed with DJI for China’s unique road conditions. The SAIC Audi A5L incorporates Huawei’s autonomous driving system. Upcoming Audi letter-series vehicles, including their first EREV, will adopt Momenta’s driving technology.

To enhance profitability, maintaining stable market pricing is also critical. Tao emphasized the importance of effective marketing efforts that support price stability and help align profitability levels with competitors, ultimately aiming for revenue growth.

Insiders revealed that SAIC Volkswagen’s newest extended-range models aim to match Li Auto’s profit margins, requiring approximately 10% net margin space after deducting factors like channel, R&D, and marketing costs.

Cost Optimization

Facing an intense price war, Tao reiterated the urgency of further cost reductions. He authorized the finance and sales finance teams to lead a special cost optimization and efficiency enhancement initiative for H2 2025. A clear management and tracking mechanism must be established by the end of July, with regular updates to the Executive Committee.

Cost reduction efforts are not just about cutting material costs, but also improving efficiency—for instance, by reshoring outsourced R&D and lowering license fees through development process optimization.

Organizational and Channel Reform

To further improve user satisfaction, SAIC Volkswagen has reformed its dealership assessment system: The evaluation has shifted from focusing on wholesale volume to retail performance. Dealer commissions and rebates are now more tied to service quality, which will account for over 50% of the assessment weight. A third metric tracks the financial health of dealerships, all of which aim to prepare for next year’s product launches.

In terms of organizational structure, SAIC Volkswagen has established a company-level user service department, integrating fragmented functions and promoting online services. The OEM will directly respond to user needs.

These actions are expected to bring not only short-term gains but also long-term benefits. SAIC Volkswagen predicts that its competitive edge will be revitalized in 2026/2027 through product transformation.

In the first half of 2025, SAIC Volkswagen sold 523,000 vehicles, a 2.3% year-on-year increase. In June alone, sales hit 96,000 units, a 15.1% YoY jump, leading the joint venture segment. The Lavida, Passat, and Tiguan were all segment leaders in combustion engine sales. The Pro family equipped with DJI’s driving system has been pivotal in recapturing market share.

Despite growing sales figures, financial goals remain unmet. Tao Hailong admitted in the letter that the company must stay united to face challenges. He called 2025 a “transition year to secure the foundation,” with the real counterattack beginning in 2026 as the full NEV product matrix is rolled out.