BEIJING, Jan 12 (Reuters) - Volkswagen VOWG.DE was overtaken by Geely Auto 0175.HK in sales in China last year, dropping to third place after losing its decade-long dominance in the world's largest auto market to BYD 002594.SZ in 2024, industry data showed.

Volkswagen's two joint ventures in China with state-owned FAW and SAIC Motor 600104.SS held a combined 10.9% share in terms of retail sales, down from 12.2% in 2024, China Passenger Car Association (CPCA) data showed on Monday.

Geely Auto's 0175.HK share of its home market rose to 11% from 7.7% in 2025, while BYD's share fell to 14.7% from 16.2%.

CPCA secretary-general Cui Dongshu said the JVs represent all sales in China by Volkswagen, which remains the top-selling foreign brand in the country and has accelerated initiatives to catch up with Chinese competitors.

Legacy foreign automakers such as Volkswagen, General Motors GM.N and Toyota 7203.T have ceded share to Chinese rivals due to a slower shift to electric vehicles, which Chinese consumers increasingly favour EVs due to state subsidies.

As well as an expanded partnership with Xpeng 9868.HK to develop electronics architecture for more models in China, Volkswagen plans to develop its first in-house chip for next-generation smart cars in China with Horizon Robotics 9660.HK.

Volkswagen is also looking to export cars developed and made in China to more overseas markets, where automakers including BYD are keen to expand to offset a sluggish home market.

Geely and other Chinese automakers such as Leapmotor 9863.HK gained share last year, mainly in the budget car segment, as BYD found itself in the crosshairs of an industrywide call against intense competition.

The segment with cars priced below 150,000 yuan ($21,512) made up more than 50% of China's new passenger vehicle sales last year.

($1 = 6.9729 Chinese yuan renminbi)

(Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh; Editing by Alexander Smith)

((qiaoyi.li@thomsonreuters.com;))