Volkswagen AG (VOW) Chairman Ferdinand Piech said the company’s sales in China will grow at least 9 percent in 2013 after expanding 10 percent or more this year, driven by consumers buying their first cars.
“The growth is tremendous,” Piech said in an interview today in Tianjin, China, where he’s attending the World Economic Forum. “You have so many people without cars and we expect a few buyers for our products.”
The maker of the Golf hatchback and the Beetle, which counts China as its biggest market, is planning to invest 14 billion euros ($18 billion) until 2016 to increase production in the country. Still, Volkswagen is facing slowing demand in the country as growth in the world’s second-largest economy decelerates.
“China is VW’s most important market,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “The strong position there is their advantage because the growth outlook for China is good even if the market cools down a bit.”
Shares of Europe’s largest carmaker dropped as much as 1.30 euros, or 0.9 percent, to 140.70 euros and were down 0.1 percent as of 11:36 a.m. in Frankfurt trading. The stock has gained 23 percent this year, valuing the Wolfsburg, Germany-based automaker at 62.2 billion euros.
‘Plus or Minus’
Volkswagen, banking on the world’s largest pool of first- time buyers to counter slowing markets in Europe and Japan, generated 1.78 billion euros in operating profit from its Chinese ventures during the first half, up 53 percent from a year ago. Group deliveries during the first seven months advanced 17 percent to 1.51 million vehicles, accounting for 29 percent of the German automaker’s global sales.
“We are happy also with 9 percent in china,” Piech said. “Double digit is risky, because if there are little things happening in the world, it’s dangerous for us. As long as it’s around 10 percent, plus or minus one percent, it’s fine.”
Volkswagen’s 2.26 million deliveries last year trailed those of General Motors Co. (GM), whose sales in China -- including Wuling minivans -- rose 8.3 percent to 2.55 million.
Within Volkswagen’s stable of brands, Sales of Audi luxury vehicles rose 15 percent globally in August, led by a 24 percent gain in China, according to the company. Volkswagen-brand deliveries increased 20 percent last month, helped by the China region, the company said today.
As part of a management shakeup, Volkswagen appointed Jochem Heizmann from the company’s board to oversee Chinese operations starting this month. Piech said he had a meeting with Heizmann last weekend, though he didn’t elaborate on their discussions.
Heizmann is taking charge of the China operations as a glut of unsold cars plagues dealers nationwide. China’s overall passenger-vehicle deliveries trailed analysts’ estimates for a second month in August as consumers held off purchases in anticipation of more discounts.
In Europe, Volkswagen isn’t suffering, though pricing pressure in the region will continue, Piech said. Some carmakers need to “disappear” for the industry to return to health, Piech said.
“There are too many manufacturers,” Piech said. “We are healthy. The others suffer.”
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