Volkswagen doesn’t have the most attractive cars in China, study says

Article by Christian Andrei, on August 25, 2010

Sales of Volkswagen AG in China rose 36.7%, which is quite an achievement; however, it falls short of the 46% growth in the entire market. Also, VW does not seem to appeal that much to Chinese consumers. It failed to win any of J.D. Power's China APEAL awards in 2009. VW however has an edge over other carmakers  its clear strategy on how to achieve long-term growth.

This should be enough for VW to strengthen its lead in the country. The market has been expanding by about 16% each year. But while most carmakers in China are focused on increasing production capacity, the German automakers are instead banking on good planning to prepare far ahead. In 2005, a four-year-long "Olympic Program" was started by Volkswagen Group China.

The program was aimed at integrating the purchasing activities and reducing costs of its two joint ventures: Shanghai Automotive Industry Corp. and China FAW Group Corp. After the program was accomplished, Volkswagen Group China then launched "Strategy 2018" in February 2009, even as the Chinese auto market had yet to recover from a temporary slowdown.

VW said that it will add or renew at least four models annually. It also aims to double the number of its joint ventures' dealerships to achieve 2 million vehicles sales by 2018.

In 2009, VW was able to sell 1,400,008 units, representing a 13% share of the Chinese passenger vehicle market. This stands for a portion bigger than any other automaker. It is currently on track to achieve the targets set under the "Strategy 2018" well ahead of schedule.

To further reinforce its position in China, VW has many plans in store for the next three years. Announced in early January, the statement from VW said that it will spend more than four billion euros on capacity expansion at the Nanjing and Chengdu plants, and on enhanced new product planning. From 2010 to 2012, VW will also launch 20 new or updated models. Of those, seven will go on sale this year.

Topics: vw, china

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