SHANGHAI -- For decades, Volkswagen AG has enjoyed a comfortable status as China's top automaker on the strength of ancient models like the Santana and Jetta.
But as aggressive rivals nip at its market share, VW finally is preparing to defend itself. That's a big change, and a much-needed one.
Consider its initiatives this spring. VW has decided to build a new assembly plant in south China, and a second plant is rumored to be in the works. That's tantamount to declaring a war against Toyota and Honda, which currently dominate the south China market.
VW has long been reluctant to bring in new models and technologies into China, which is why the company still relies on the Santana -- a vehicle that VW launched in 1981 -- and Jetta for nearly one-third of its sales volume in China.
But that mindset is changing. This year, VW plans to launch seven new or updated models in China -- all locally produced. In May, its plant in the northeast China port city of Dalian became the only factory outside Germany to produce VW's double-clutch transmission.
To make sure its expansion runs smoothly, VW is bringing in Karl-Thomas Neumann, a fast-rising executive with expertise in electric cars. On Sept.1, Neumann will replace Winfried Vahland as chief of VW's China operations.
Company CEO Martin Winterkorn said Neumann "will break new ground in China, both in terms of business development and as an expert in future technologies."
Such moves are timely for the German brand whose market share continues to erode.
VW is still by far the largest automaker by sales in China. But with its aging product lineup, the company is hard-pressed to fend off aggressive challengers such as Hyundai and BYD.
VW's share of the China market dropped from 13.1 percent in 2009 to 11.5 percent in the first four months of this year.
In the same period, Hyundai's market share rose from 6.0 percent to 6.8 percent while BYD rose from 5.1 percent to 5.4 percent.
To be sure, there is no guarantee that VW can reverse its market share slide in China. Nearly every automaker, international and domestic, is building new plants and launching new models.
But VW finally has ventured out of its comfort zone and is refreshing its product lineup. That's progress.