Volkswagen AG is in negotiations with its Chinese partners -- SAIC Motor Corp. and China FAW Group Corp. -- about developing a local brand as rivals prepare to begin sales of new models specially created for the world's largest auto market.
Karl-Thomas Neumann, CEO of Volkswagen Group China said that VW “sees” a local brand as an opportunity to get into new market segments.
VW may follow competitors Honda Motor Co., General Motors Co. and Nissan Motor Co. in introducing a new, cheaper brand in China as they seek to win market share from Chinese rivals.
In 2010, China vehicle sales grew more than 32 percent to 18.06 million, outselling the U.S. as the world's largest auto market for the second year running.
Analysts from Macquarie Group Ltd., Nomura Holdings Inc. and Booz & Co. said foreign manufacturers are introducing cheaper and smaller models and targeting inland cities, like those in Sichuan and Henan provinces, where per capita car ownership is low and incomes are rising.
Neumann added that China's government is promoting local manufacturers and all foreign carmakers' joint ventures in China have been asked to develop local brands. [via autonews - sub. required]