Volkswagen optimistic on China sales growth

Volkswagen is optimistic its positive sales trend from the two previous quarters will continue in China, the world’s biggest auto market, its China chief Jochem Heizmann said yesterday.

Volkswagen also plans to invest €4 billion in connection with its joint venture partners in China this year, while the expansion of its share of the sports utility vehicle (SUV) and new energy vehicle (NEV) markets will be a focus over the next several years, Mr Heizmann told reporters ahead of the Beijing auto show, which begins today.

The company has lagged in China’s SUV boom with relatively few locally produced models, but it plans to change that with launches of 10 locally made VW-, Audi- and Skoda-badged SUV models in the years ahead.

“There is an SUV offensive on the way,” Heizmann said. “It will begin this year with a B segment SUV,” he added, declining to give details on which joint venture or brand would produce that model. B segment refers to small cars.

On new energy vehicles, Volkswagen estimates two million will be sold in the overall Chinese market by 2020, in line with the government’s target, with the German automaker selling a few hundred thousand.

Heizmann also said Volkswagen is prepared for any recalls in China on any diesel-related issues, referring to the so-called ‘dieselgate’ scandal in which it was discovered last year that the automaker modified its cars to cheat emissions tests.

The company has been in talks with regulators globally on how to make amends, although in China the issue only affected roughly 2,000 cars.

Fall-out from the scandal contributed to Volkswagen narrowly losing its crown as the top foreign automaker in China to General Motors in 2015, according to data from the China Automobile Makers Association. 

Volkswagen’s China sales fell 3.4% last year to 3.5 million units. Volkswagen said on Friday it would take a €16.2bn hit to its 2015 results and slash its dividend to help pay for its emissions-test cheating scandal.

The news came amid growing signs a regulatory clampdown in the wake of VW’s cheating is affecting the broader industry, with Germany-based automakers including Mercedes-Benz, and Opel - as well as VW - agreeing to recall a total of 630,000 cars to fix diesel engine technology blamed for high pollution.

Last Thursday, VW agreed a framework settlement with US authorities to buy back or potentially fix about half a million cars fitted with illegal test-fixing software, and set up environmental and consumer compensation funds. 

VW said the money it was setting aside to pay for the scandal would drive it to a 2015 net loss of 1.36 billion euros, the largest in its history and the first on an annual basis since 1993. Full results are due on Thursday.



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