Skoda, the Czech carmaker and brand owned by Volkswagen Group, plans to withdraw from the Chinese market by mid-2026, Reuters reported, citing the company.

The move follows a prolonged drop in Skoda sales as China’s passenger car market pivots rapidly towards electric vehicles.

China was previously Skoda’s largest market. Deliveries topped 300,000 between 2016 and 2018, the report said. Sales later fell to 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," the company said in a statement, accoding to Reuters.

Skoda added that after-sales services for existing customers will continue in China.

As part of what it described as a strategic repositioning, Skoda said it plans to concentrate on strengthening its presence in India and Southeast Asia, where it saw growth in 2025.

Czech news website E15 first reported the withdrawal.

Skoda’s exit comes as Volkswagen has faced increasing pressure in China's market, where local brands such as BYD and Geely have moved ahead in sales, ending years of dominance for legacy carmakers in a tech-driven EV market.

Unlike Skoda, Volkswagen and its subsidiary Audi are aiming to regain ground through multiple product launches and more localised production.

Volkswagen Group chief executive Oliver Blume recently told German newspaper Bild am Sonntag that Germany could learn from China’s industrial policy approach.

“The Chinese take a very systematic approach with so-called five-year plans and have clear priorities with that too,” he said. “It’s optimally structured.

"And what we find very positive in China is a high level of discipline and willingness to implement these initiatives.”

Blume also pointed to the intensity of competition in China, saying Volkswagen faces “over 150 competitors ⁠and strong innovation dynamics”.