Volkswagen targets China growth

26 July 2011

BEIJING: Volkswagen, the automaker, plans to use new product launches and green technology to enhance its position in China.

The German multinational, which works with local partners FAW and SAIC, expects sales across the world's most populous nation to top 2m units in 2011, an improvement from just over 1.9m in 2010.

Such confidence follows the 16.4% increase in demand secured during the first half of this year, when 1.1m vehicles were acquired by drivers in the Asian country.

More specifically, the company's eponymous marque, alongside the Audi, Skoda, Bentley and Lamborghini brands, all saw purchase levels rise on an annual basis.

As a result, Volkswagen outperformed the category as a whole, which enjoyed an 11.9% expansion, and boosted its market share by one percentage point, to 19% overall.

Karl-Thomas Neumann, president and CEO of Volkswagen Group China, told the China Daily that its broad array of vehicles provided a considerable advantage.

"The constant gain in our market share reflects the fact that our Chinese customers appreciate our product portfolio very well," he said.

In a bid to build on this momentum, Volkswagen intends to invest €10.6bn in its Chinese operations between 2011 and 2015.

"China's vehicle market will be stable and normal after the 50% or 60% growth over the past two years. Our forecast is 8% to 10% this year," said Neumann.

"Our investment plan is based on average growth of 8%."

The firm is currently constructing two factories capable of delivering 300,000 vehicles each, as part of an ambition to raise its Chinese output from 2m units to 3m units.

"Our sales in China are only limited by our capacity," said Neumann.

Another core element of Volkswagen's strategy will be launching six new models in China per year over the period to 2015, including more green cars.

"We will bring more environmentally-friendly technologies to China - not only with our new products, but also in our new production lines," said Neumann.

The expansion of China's middle class, surging interest in second and third tier cities, and further improvements to the domestic infrastructure all provide room for optimism.

"We will be able to defend and extend our market share in China," Neumann said.

Data sourced from China Daily; additional content by Warc staff