An unit of automobile manufacturer Volkswagen is considering leaving China due to harsh competition in the world’s largest car market.

As Reuters reported, Czech carmaker Skoda Auto, part of Volkswagen, is mulling its withdrawal from China.

Magazine Automobilwoche cited Skoda chief executive officer Klaus Zellmer saying that his company will make a final decision in 2023.

Zellmer has served as the new CEO of Skoda since the beginning of July. Earlier, he was Volkswagen brand’s sales and marketing chief. Before that, Zellmer had a 23-year career at Porsche.

Regarding the decision on quitting China, Zellmer said, “The competition is very intense there, so we will consider, together with our Chinese joint venture partner, how we want to proceed.”

He added, “If we want to focus our energy, it’s worth checking all scenarios and then deciding.”

The Skoda executive said that instead of producing cars in China, Skoda could consider simply selling them.

Zellmer said that the automaker now wants to focus more on the Indian market.

A number of car makers continue to face challenges in China, the world’s largest auto market, especially after China implemented the stringent “zero-COVID” policy.

Bentley Motors Ltd, another unit of Volkswagen, recently revealed that it lost wealthy customers in China due to the country’s COVID shutdowns.

Bentley CEO Adrian Hallmark said on December 7 that its orders in China slumped this year because customers were just not shopping during lockdowns.

With weak demand from China, Hallmark said that the British luxury carmaker expects its production will drop slightly next year.

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