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VW's confidence rises in gains

By Gong Zhengzheng (China Daily)
Updated: 2006-04-05 07:03

German car maker Volkswagen, after gaining nearly 40 per cent in the first quarter, expects its full-year sales in China to outpace overall growth of the world's No 3 car market this year.

"We will grow faster than China's entire car market this year from 2005," a spokesperson from Volkswagen Group China told China Daily yesterday.

He declined to reveal how many vehicles Volkswagen expects to sell in China this year.

The biggest European carmaker said that it sold 164,339 cars in China in the first three months, up from 118,030 units a year ago.

China sales of the Volkswagen brand group, including its Czech arm Skoda, grew by 32 per cent to 145,328 units in the period, while Audi's sales reached 19,011 units, skyrocketing 131 per cent.

The positive performance stalled Volkswagen's consecutive sales tumbles that have occurred over the past two years in China due to strong attacks from US and Asian rivals. Its China sales dropped to 571,000 cars last year from almost 700,000 units in 2003. Meanwhile, its market share in China shrank to 17 per cent from 31 per cent.

Growth of China's car market is predicted to slow down this year from 2005 due to imminent price wars in the so-called "B" segment, which includes models like the Volkswagen Passat, Honda Accord, Mazda6 and Toyota Camry.

Matthew Li, a Beijing-based analyst with Automotive Resources Asia Ltd, said the Chinese car market would expand by 18 to 20 per cent this year, compared to 27 per cent growth in 2005. Last year, car sales in China totalled 3.1 million units.

Figures of overall car sales in China from January to March this year are not available yet, but are estimated to grow sharply compared to a weak first quarter in 2005.

Volkswagen, which began production in China in 1985, now runs two car ventures with the nation's top two automakers - First Automotive Works Corp (FAW) and Shanghai Automotive Industry Corp.

"We expect further growth in the coming months (in China) and we will achieve our defined target to do better sales in the overall year, compared to 2005," Winfried Vahland, president of Volkswagen Group China, said in a statement.

"Shanghai Volkswagen and FAW-Volkswagen are in a process to become fully customer oriented by restructuring their sales networks," Vahland said.

Volkswagen plans to introduce 10 to 12 new models into the two joint ventures by 2009, according to a plan revealed last year. Shanghai Volkswagen said it would launch the Skoda Octavia at the beginning of next year. FAW Volkswagen will start to sell the Sagitar later this month.

Also yesterday, French carmaker PSA Peugeot Citroen's joint venture with Dongfeng Motor said its sales jumped by one-third to 43,728 cars in the first quarter. Other major foreign carmakers in China, such as General Motors, Honda, Toyota and Hyundai, have not revealed their first-quarter results.

(China Daily 04/05/2006 page10)