The Santana's biggest success was in China. The Santana (B2) had been built in China on a small scale trial basis by the Shanghai Tractor Automobile Corporation (STAC), predecessor of the SAIC group, since 1982. The first 100 cars were built from CKD kits delivered from Germany. In 1984, Volkswagen signed a contract with STAC, along with the China National Automotive Industry Corporation (CNAIC) and the Bank of China to form the Shanghai Volkswagen Automotive joint venture in October 1984. The first assembly line of the Santana started in October 1985. In September 1986, the 10,000th Santana was built in China. The car and venture laid the ground-works for China's mass motorization. The drive to fully localize production became the impetus for the Chinese auto parts industry: In 1986, the quota of made-in-China parts was below six percent. In 1995, the local content quota stood at 89 percent.

Initially launched with a 1.6-litre petrol engine, the Santana was updated with a 1.8-litre petrol in 1987, first available in the Santana Variant station wagon introduced by Shanghai in 1986. The first Santanas were all originally equipped with a four-speed manual transmission. The 1.6 remained available in the sedan until as late as 2006.