Volkswagen could be a "niche" brand within five years

Volkswagen Australia says maintaining annual sales above 10,000 units will be critical in not becoming a “niche” player in the local market.

Speaking during the launch of Volkswagen’s expanded plug-in hybrid SUV range, Volkswagen Passenger Vehicles Australia director Piergiorgio Minto said remaining a meaningful volume player was critical to the brand’s future.

“We want to play a role in the Australian market and definitely a role that is not a niche or a role that is just very low in terms of volume,” he said.

“Whenever you start selling less than 10,000 vehicles a year…you're niche.”

The brand sold roughly 29,000 vehicles in 2025, but with sales down more than 20 per cent, continued declines at a similar rate could push the brand into that exact territory within five years – a position the company says it does not want to occupy.

Volkswagen believes recent shortcomings in its product portfolio have contributed to the sales decline, particularly as rivals rapidly expanded their hybrid and EV offerings.

“The biggest challenge from a product perspective is about aligning our wider customer needs within the scope of our product line,” product boss Arjun Nidigallu said.

“So having that something for everything hasn't been the case for a while. So that has been a challenge.”

Executives are hoping the arrival of the second-generation T-Roc, alongside a broader range of hybrid, plug-in hybrid and electricmodels, will help rebuild momentum.

“But with ID launching last year, now e-Hybrid launching now, in the major segments of the Australian market, we could certainly, confidently say we've got something for everyone,” Nidigallu said.

The rapidly changing automotive landscape – particularly the influx of cheaper electrified models from emerging Chinese brands – is also placing growing pressure on established manufacturers.

While some new entrants are able to bring vehicles to Australia in as little as nine months, legacy brands like Volkswagen typically operate on much longer development and rollout cycles.

The ID.4, for example, arrived in Australian showrooms almost four years after its global debut.

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