VW CEO Says China's `Normalization' Doesn't Mean Growth's Over

  • Carmaker to proceed with expansion plan, CEO says in interview
  • Budget-priced vehicle is planned to appeal to Chinese buyers

Volkswagen Chairman Sees Continued Growth in China

Volkswagen AG is pushing ahead with expansion plans in China, undeterred by a sudden slowdown in the once fast-growing auto market.

Demand in China is undergoing a “normalization” and will return to growth in the future, Chief Executive Officer Martin Winterkorn said in an interview with Bloomberg Television. To tap that potential, VW plans to roll out a budget model to appeal to Chinese buyers, especially in the less-developed western part of the country.

“We are convinced that China will continue to grow -- surely no longer in two digits always, but it will continue to grow, particularly in the west,” Winterkorn said at Volkswagen’s stand at the Frankfurt International Motor Show. “We are getting ready for this.”

A recovery would be critical for Volkswagen, which is grappling with a declining share of car sales in the U.S. as well as the slowdown in China, its biggest market. That puts pressure on the Wolfsburg, Germany-based company to boost sales in Europe to meet a goal of keeping 2015 deliveries steady with last year’s record 10.2 million vehicles.

Volkswagen’s worldwide sales in the seven months through July fell 1 percent to 5.83 million autos, weighed down by a 5.3 drop in China, where the company is the market leader. To spur global demand, the manufacturer is presenting updated versions of the VW Tiguan sport utility vehicle, Audi A4 sedan and Porsche 911 sports car at the Frankfurt show. (For more news from the industry event, see SHOW.)

Research company IHS Automotive lowered its forecast for China’s auto market, predicting that car sales will grow 1.4 percent in 2015 compared with an earlier prediction of a 4.4 percent gain. A significant rebound probably won’t happen in the coming months, IHS said on Sept. 10.