Volkswagen, one of the most recognisable auto brands in the world, aims to consolidate its pole position in the fluctuating Chinese auto market in the coming years. The company competes with traditional rivals like General Motors Co. and Nissan Motor Co. Ltd. in this market, but is confident of selling more than 2 million units this year. It has set its hopes in the growth potential of smaller cities and aims to outpace the Chinese market, with expected annual growth of 8-10 per cent in the coming time.
VW and its subsidiaries, like Audi, have been making waves in this Asian country, where growth boomed by 32 percent and 46 percent in 2010 and 2009, respectively. According to Karl-Thomas Neumann, President and CEO of Volkswagen's China operations, "We passed 1 million in 2008 and nearly three years later we are absolutely confident we could pass 2 million this year." However, this may prove to be a little difficult after the recent slowdown in the sales figures, when the market recorded just 3.2 per cent gain in the first 9 months of 2011.
This drop in sales is being attributed to various factors, such as the end of tax incentives for small cars. The increasing traffic in cities like Beijing and the continuing efforts of local authorities to control the same is also cited as a reason for this drop. However, Neumann maintains an optimistic attitude and believes that there is ample demand for VW passenger cars in medium-sized and small Chinese cities. He believes that such markets may assist the company in increasing sales in the coming time and prove to be a 'major growth area' for the European auto maker.
In fact, he commented, "Last year this time, more specifically around Christmas, everyone is saying 'ah, now it's over'. Beijing is introducing this limitation on vehicles to be registered so the market will slow down," He continued, "But in total, it is not only Beijing or Shanghai, China has much more (potential), as you can see here in Guangzhou and as you can see the growth in tier-two or tier-three cities."
In the first nine months of 2011, VW China sold 1.69 million cars in the country, 14.6 per cent more than the sales figure for the same period in 2010. The chief rivals, GM and Ford reported sales increase of 6.6 per cent and 10 per cent for the same period. The market share of VW China has also grown from 12 per cent in 2009 to 15.8 per cent this year in south China, a bastion of Toyota Motor, Nissan and Honda Motor. Overall, Volkswagen, which works with SAIC Motor Corp and FAW Group in China, holds 19 per cent of the total share of the national auto market.
The company hopes to capitalise on the growing momentum by doubling its annual capacity to 3 million units by the year 2015. This will also be helped by introduction of new models, like Seat, and focus upon electric vehicles. Neumann said that both joint of ventures of VW China have successfully developed electric cars and hope to launch test fleets by next year. According to him, the auto manufacturer is "aiming to go to seriously production" of locally-made EVs under the Volkswagen brand name by 2013-14.
