VW Signals It Will Outsell GM in China Again This Year

Volkswagen AG (VOW) forecast its sales in China will increase 10 percent or more in 2014, signaling the German automaker will outsell General Motors Co. (GM) in the world’s biggest auto market for a second-straight year.

VW expects “double-digit” growth in China from last year’s record, pushing deliveries to more than 3.5 million vehicles, Chief Executive Officer Martin Winterkorn said in a statement yesterday. Though he didn’t specifically refer to GM, which sold about 110,000 fewer vehicles than VW in China last year, the Detroit-based company said in February it would keep up with a market that’s poised to grow 8 percent to 10 percent.

For China’s two-biggest foreign automakers, the competition is intensifying in the country and the battle-lines are shifting toward smaller cities as the economy slows and anti-pollution measures spread. That’s prompting companies from VW to GM to customize more car features catered to Chinese tastes and speed up the introduction of new models into the country.

“We’re certainly seeing cities in China place restrictions, there are pressures on the infrastructure, there are pollution issues,” Finbarr O’Neill, president of J.D. Power & Associates, said in an interview. “But as a whole, the growth throughout China in the tier 3 and 4 cities, in the west, and the aspiring middle class, assures continued growth for the automotive industry.”

Photographer: Tomohiro Ohsumi/Bloomberg

Volkswagen AG expects China deliveries to rise at least 10 percent from last year’s record, pushing deliveries above 3.5 million vehicles, Chief Executive Officer Martin Winterkorn said in a statement. Close

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Photographer: Tomohiro Ohsumi/Bloomberg

Volkswagen AG expects China deliveries to rise at least 10 percent from last year’s record, pushing deliveries above 3.5 million vehicles, Chief Executive Officer Martin Winterkorn said in a statement.

Dealer Expansion

VW, the Wolfsburg, Germany-based carmaker that owns a dozen automotive brands, is planning to increase its number of dealerships in China to more than 3,600 by 2018, up 50 percent from now, the company said. VW said it will also introduce a range of low-to zero-emission models to meet rising demand for such cars in the country, starting with the e-Up! and e-Golf this year, followed by models such as the Audi A3 E-Tron plug-in hybrid.

“We will intensify our customer orientation even further so that we can respond even faster and more flexibly to customers’ wishes - particularly here in China,” Winterkorn said.

Outselling GM in China helped VW surpass the U.S. automaker as the world’s second-biggest carmaker by sales last year. VW, whose businesses include the Audi and Porsche premium marques and the Skoda mass-market nameplate, said last month that it may sell more than 10 million vehicles for the first time in 2014, four years earlier than planned.

The German company will introduce more than 100 new or revamped models through next year in a strategy to overtake Toyota Motor Corp. (7203) as the global industry leader by 2018.

Close Race

Still, VW lagged behind GM in China during the first quarter, according to figures released by the companies this month. GM, which had been the top-selling foreign automaker in the country for eight straight years before losing that spot in 2013, saw first-quarter China deliveries rise 13 percent to 919,114, edging out VW’s 880,700 units.

GM will debut a redesigned Chevrolet Cruze sedan at the Beijing auto show, which opens to the public in the coming week, picking China for the model’s global rollout. The Cruze, Chevrolet’s best-selling model in China last year, is one of the six new or refreshed models under the brand being brought to the nation this year by GM. The Detroit-based company is also showing 36 other vehicles at the show.

The largest U.S. automaker is spending $11 billion in China through 2016 to boost products and manufacturing capacity.

Among other global automakers, Ford Motor Co. is bringing its premium Lincoln cars to China decades behind VW Audi and BMW, testing whether the second-biggest U.S. automaker can emulate the recent turnaround of its namesake brand.

Even though the company started producing cars in China in 2003, about two decades behind VW, the popularity of its SUVs and Focus cars helped Ford see a 49 percent surge in China sales last year, overtaking Toyota to become the nation’s fifth-largest foreign automaker. This year, it’s on pace to overtake Hyundai Motor Co. and Nissan Motor (7201) Co. for third place.

To contact Bloomberg News staff for this story: Dorothee Tschampa in Beijing at dtschampa@bloomberg.net; Alexandra Ho in Shanghai at aho113@bloomberg.net; Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net Chua Kong Ho

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