Volkswagen Sales in China Fall Amid WTO Concerns

Strategic Insights -

Volkswagen, the German carmaker leading the Chinese market, has seen sales in the mainland decline in the first five months of the year. Vice-president Stefan Jacoby attributes the 6% drop in sales to 116,000 vehicles to customers delaying purchases in anticipation of the launch of the new Passat model. However, the company is forecasting a shrinkage in its market share following China's accession to the World Trade Organisation (WTO). Volkswagen's joint venture in Shanghai has witnessed a sales decline of 18% to 75,000 units, while its FAW-Volkswagen plant in Changchun has experienced a 26% increase in sales to 40,600 vehicles.

Key Takeaways:

  • Volkswagen's sales in China fell 6% in the first five months of the year, reaching 116,000 vehicles, according to Vice-president Stefan Jacoby.
  • The decline in sales is attributed to customers delaying purchases in anticipation of the launch of the new Passat model.
  • Volkswagen's joint venture in Shanghai has witnessed a sales decline of 18% to 75,000 units in the first five months.
  • The FAW-Volkswagen plant in Changchun has experienced a 26% increase in sales to 40,600 vehicles in the same period.
  • Volkswagen is forecasting a shrinkage in its market share following China's accession to the WTO, potentially reaching 35-40% over the next five years.
  • The company plans to spend DM3bn (Euros 1.53bn, Dollars 1.45bn) in the next few years to meet the intensified competitive challenge.

Statistics:

  • Volkswagen's sales in China fell by 6% in the first five months of the year.
  • 116,000 vehicles were sold in China from January to May.
  • Volkswagen's joint venture in Shanghai sold 75,000 units, a 18% decrease.
  • The FAW-Volkswagen plant in Changchun sold 40,600 vehicles, a 26% increase.
  • Volkswagen's market share may shrink to 35-40% over the next five years.
  • The company plans to spend DM3bn (Euros 1.53bn, Dollars 1.45bn) in the next few years.
  • The new Passat model is expected to sell 30,000 units this year.

Sources:

  • "German Giant Faces WTO Worries" by Thomas Harrigan, Financial Times, May 26, 2002.
  • "China's Entry into WTO Expected to Impact Car Market", Agence France-Presse, April 10, 2002.
  • Volkswagen Group press release, "Volkswagen Group's Strategy for China", April 2002.