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VW sets March record despite troubled times

By Li Fangfang (China Daily)
Updated: 2009-04-20 07:50

A loyal partner in China's automobile market for more than two decades, Volkswagen is setting new records despite the global downturn.

"My estimate is that Volkswagen's sales in China will overtake Germany this year," said Martin Winterkorn, CEO of Volkswagen AG, "China is our second home market."

Volkswagen Group China and its joint ventures Shanghai Volkswagen and FAW-Volkswagen for the first time broke the 100,000-unit barrier in a single month as sales grew 9 percent in March to 112,466 vehicles - its best monthly sales ever in China.

The record came as new car purchases nationwide reached 1.11 million vehicles in March - another record - surpassing US sales for the third month in a row. Tax cuts and rebates for small car purchases are credited for the increase.

Total sales in the first quarter reached 284,143 cars on the mainland and in Hong Kong, 6 percent more than the 268,204 cars sold in the first three months of 2008.

Sales of Skoda cars jumped 18.7 percent to 19,248 units, enabling China to overtake Germany as the Czech brand's biggest market in the world - after arriving in the most populous nation just two years ago.

China halved purchase taxes on cars with engines smaller than 1.6 liters this year to boost the auto sector and has plans for 5 billion yuan in subsidies to vehicle buyers living in the rural countryside.

"Volkswagen Group fully supports the Chinese government's new policy to encourage production of vehicles under 1.6 liter engine displacement as well as other measures to boost automobile sales," said Winterkorn.

Volkswagen offers a range of models with engines smaller than 1.6 liters, including the new Lavida and Bora, as well as Skoda Fabia.

"Through the implementation of these measures, we believe that the Chinese automobile industry will not only develop steadily, it will do so at an even faster rate," said Winterkorn.

"Through reorganization, Chinese automakers can draw upon each other's strength, form synergy and make China's automotive industry more competitive in the world arena."

Growth in China's auto market during such globally troubled times has made the Shanghai auto show one of the most important industry gatherings this year.

Together with Shanghai-Volkswagen and FAW-Volkswagen, Volkswagen Group brings its entire series and latest technologies to the weeklong show, including two China premieres - the locally produced sixth-generation Golf and Passat New Lingyu.

"Our BlueMotion technologies will also be highlighted at Auto Shanghai 2009," said Winterkorn.

Volkswagen's high value placed on the Shanghai auto shows where the company thinks the future lies - in large part in the biggest auto market in the world.

"Compared with developed countries, per capita car ownership in China is still low, offering enormous potential for growth," said Winterkorn.

Volkswagen will invest $1 billion in this year and next in China in new technologies, introduction of new products, brand building and upgrading sales channels and services.

"As the most reliable partner for China, Volkswagen Group will undoubtedly get more development opportunities from a stronger automotive industry in China," said Winterkorn.

The German group set bold targets last month to double annual sales in the nation from the current 1 million to 2 million units by 2018.

"Together with our two joint ventures, Shanghai Volkswagen and FAW-Volkswagen, we will double our dealership numbers to over 2,000 to achieve the 2 million sales target," said Winterkorn.

As part of the strategy, Volkswagen will analyze long-term trends and make further plans for sales, customers, products, technology, production, supply, responsibility and partnership. It will also look for more opportunities in second- and third-tier cities.

Over the next 10 years, Volkswagen Group will introduce at least four new or updated car models to the Chinese market each year.

"Also our most advanced and environmentally friendly BlueMotion technologies including the TSI engine and DSG gearbox will be applied to more and more locally produced models," said Volkswagen CEO.

According to the company's existing initiatives - its powertrain technology and customer service strategy - Volkswagen and its two ventures are committed to a 20 percent reduction in fuel consumption and emissions by 2010 across the entire fleet.

The measures have already reduced the average fuel consumption by 15 percent.

Its US rival General Motors also said it plans to double China sales over the five years, with 2 million vehicles sold each year.

The ailing US company will launch more than 30 new or upgraded models during the period.

"As we all know, the global economic crisis presents challenges to sustaining the rapid growth we have seen in China's economy, but I believe it will continue over the long run," said Winterkorn.

Volkswagen has sold more than 7.3 million vehicles in China since it established its first venture with SAIC in Shanghai in 1984. It has invested 6.8 billion euros in the country, accounting for 20 percent of the total investment in China's automobile industry.