Volkswagen first-half sales drop slightly
By Gong Zhengzheng (China Daily)
Updated: 2004-07-20 09:20

The company sold 310,000 cars in China from January to June, down 4 per cent from a year earlier, Volkswagen China Group said in a statement.

However, Volkswagen remains the No 1 foreign car producer in China, its biggest single market outside Germany, despite vigorous offensives from rivals, such as US General Motors (GM) and Japan's Honda Motor.

A Volkswagen Bora is on display in a retailer in Nanjing, East China's Jiangsu Province. The German car firm's sales in China tumbled slightly during the first half of this year.[newsphoto]

Volkswagen controlled 26 per cent of China's total passenger car market during the first half of this year, down from 30.8 per cent last year and 50 per cent two years ago.

GM sold 259,653 vehicles in China between January and June, jumping by 57.6 per cent from a year earlier.

Sales of Honda in China jumped by 59.2 per cent to 84,623 cars during the same time.

In June alone, joint ventures of GM in Shanghai and Honda in southern Guangdong Province even dwarfed Volkswagen's in Shanghai and northeastern Jilin Province to become the top two car sellers in China for the first time.

However, Volkswagen, which kicked off production in China almost 20 years ago, said that it was confident of preserving its leadership in the market.

"We will spare no efforts, mainly through improvements in sales and services networks, to fulfill our full-year sales target of 800,000 cars in China," the statement said.

Volkswagen sold 697,000 cars last year in China, up 36 per cent from 2002.

"Sales of our many models increased considerably following price cuts of Shanghai VW and FAW VW (Volkswagen's two joint ventures in China), and now we have no new plans to change prices," the statement said.

Last month, the two joint ventures slashed prices of their cars by 3,000 to 12,000 yuan (US$362-1,207) to deal with pressures from dozens of price cuts made by other players.

"Whether Volkswagen will achieve its full-year sales goal will mainly depend on performance during the third quarter of this year," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

"Besides the overall market slow down and strong competition from rivals, Volkswagen's sales decline in the first half of this year could be blamed on the lack of new competitive products in China."

At present, Shanghai VW with Shanghai Automotive Industry Corp produces the Santana, Passat, Polo and Gol. FAW VW with First Automotive Works Corp makes the Jetta, Bora, Golf, Audi A6 and A4. Shanghai Volkswagen will also produce the Touran multi-purpose vehicle this year. FAW VW will make the Caddy wagon at the beginning of next year.

Future models to be introduced at the two joint ventures include new-generation Passat, Bora, Audi A6 and A3.

"However, Volkswagen's No 1 position could not be threatened easily in the short term as it has laid a strong premise in China in 20 years, though its market share will continue to shrink as a result of increasing competition," Zhang said.

The German company plans to add 5.3 billion euros (US$6.5 billion) investment and increase output in China to 1.6 million cars by 2008.

Volkswagen China Group predicted that car sales in China will grow by 10 to 15 per cent this year from last year.

Sales growth rate of China-made passenger cars stood at 31.59 per cent during the first half of this year, down from 75 per cent last year.

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