Volkswagen set to be No 1 carmaker in China

German firm expected to overtake rival GM in sales in the world's largest car market, as competition between them intensifies

PUBLISHED : Friday, 27 December, 2013, 3:20am
UPDATED : Friday, 27 December, 2013, 3:20am

Volkswagen is poised to sell more vehicles in China than General Motors (GM) for the first time in nine years, regaining its place as the biggest foreign carmaker in the world's largest car market.

Both companies have surpassed their targets to deliver more than three million vehicles in China this year, with Volkswagen crossing the mark on December 5 and GM a week later. The German carmaker held a lead of about 70,000 vehicles in the first 11 months, according to data from the carmakers.

Competition is set to intensify between the top European and American carmakers, which have announced a combined US$36 billion in investment for China even as more of the nation's cities consider vehicle restrictions to cut pollution. Toyota Motor, still recovering from a consumer backlash, was outsold by Ford Motor in the country this year.

"China is the big battleground," said Klaus Paur, Shanghai-based global head of automotive at market researcher Ipsos. "At the same time, there's a risk of an over-dependence on the Chinese market. As long as this is all working well, it's wonderful but if something gets in the way, then the exposure to risk is even bigger."

Volkswagen said last month that it will invest US$25 billion to the end of 2018 to expand in China. In the first 11 months of this year, the Germany-based carmaker boosted sales by 17 per cent to 2.96 million vehicles, with its namesake brand accounting for almost 80 per cent of the deliveries. The carmaker also owns marques such as Skoda, Audi, Porsche, Bentley, Lamborghini and Seat.

"You really have to understand that at present, we really have capacity problems," Jochem Heizmann, president and chief executive of Volkswagen's China operations, said last month. "We could sell more."

Volkswagen's Audi, the top-selling premium brand in China, will start selling the locally made A3 compact car and a new version of the A4 next year, according to John Zeng, managing director of market researcher LMC Automotive.

Other planned models include the new VW Bora and Skoda Octavia, he said.

At GM, the new year will be marked by changes in leadership.

Mary Barra will succeed Dan Akerson as chief executive in January, becoming the industry's first female chief executive. In China, Matthew Tsien was appointed to oversee GM's largest market from January, taking over from Bob Socia, who is retiring.

GM will introduce four new Chevrolet models in China next year, according to John Stadwick, a vice-president of sales and marketing. A lack of new models has hampered the growth of the brand, which has lagged behind the industry average this year, Socia said in October.

The low-cost Baojun brand will also be expanded next year by adding a compact hatchback and multipurpose vehicle, according to Raymond Bierzynski, executive vice-president of SAIC-GM-Wuling, the GM local joint venture.

GM sells passenger vehicles in China under its Buick, Chevrolet, Cadillac, Opel and Baojun nameplates, and also counts the Wuling brand of mini-commercial vehicles.

Excluding Wuling from the tally, as researchers such as IHS Automotive and LMC Automotive do, the Volkswagen marque alone outsells GM's main Buick, Chevrolet and Cadillac brands combined.

Industry-wide, total sales of vehicles - including buses and trucks - reached 19.9 million units this year up to the end of November, putting China on course to be the first country to surpass 20 million units in annual vehicle sales.