Volkswagen AG, the world's No 2 carmaker, has said it will focus on China and continue its investment in the country, which is its largest market in the world.

"We are successful in China. We are the biggest carmaker in China. We have a long tradition in China. We have our partners with a strong commitment," said Olive Blume, chairman of the board of management, earlier this week.

"China is a pacemaker in terms of technology. China shows what will happen in the next 10 years around the world, and that's a big opportunity, especially with our strong connection with our Chinese partners. We believe in it," he said.

Volkswagen is fast responding to new developments in China to consolidate its position as the most popular international carmaker in the country.

In July, the German carmaker partnered with Chinese EV startup Xpeng to develop two models for the Chinese market.

The models, which will be available exclusively in China, will come out in 2026. They will bear the Volkswagen marque but feature Xpeng's expertise in software and autonomous driving.

Besides its deal with Xpeng, the carmaker has signed a memorandum of understanding with Chinese partner SAIC to speed up collaboration on Audi's electric vehicle development.

It said joint development with SAIC will swiftly and efficiently extend its portfolio of fully connected electric vehicles on offer in the premium segment.

Volkswagen Anhui, which is scheduled to start operations later this year, is Volkswagen AG's first majority-owned joint venture for all-electric vehicles in China.

Besides products for local Chinese customers, Volkswagen Anhui will produce vehicles for the European market as well.

"We are continuing investing in China…we will combine our experience, our knowledge with new technologies being developed in China," said Blume.