VW Races With GM for 2013 China Crown as Toyota Struggles — Businessweek

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VW Races With GM for 2013 Crown as Toyota Struggles

By News December 26, 2012

A man a Volkswagen AG (VW) flag, alongside the Chinese national during the German-Chinese signing at Volkswagen AG’s headquarters. Michele Tantussi/Bloomberg

Volkswagen AG will vie with General Co. (GM:US ) for the sales crown foreign automakers in China year, gaining share as carmakers led by Toyota Motor (7203) struggle to recover a territorial dispute.

VW, whose Audi sedans are popular Chinese bureaucrats, hasn’t the lead in the country since and will probably sell 2.7 vehicles in the country next to GM’s 2.65 million, by eight new or revamped models the Santana, Golf, Skoda and Audi Q3, according to industry JSC Automotive Consulting. GM’s new include the Cadillac XTS and three models.

Passenger-vehicle sales in will probably accelerate and as much as 10 percent next as a rebound in economic growth strength, according to eight surveyed by Bloomberg News. leaders assuming power in a handover to be completed in March may economic stimulus to increase demand, Autoforesight Shanghai Co. LMC and Synergistics Ltd. forecast.

the economy stabilizes, Chinese will have more to buy cars,” said Lin Huaibin, a based analyst at IHS Automotive. “A lot of have shown economic since September.”

Foreign automakers are stepping up investments in China, counting on the largest pool of first-time car to help offset declining in Europe. Total vehicle may surpass 19 million units year, according to the China of Automobile Manufacturers on Dec. 10.


Globally, Toyota is to take back the title of biggest automaker for 2012, as VW GM for second place in the final of the year. Toyota said its vehicle sales may rise 2 next year to reach a 9.91 million vehicles, by overseas demand.

In China, will remain the fastest-growing as it is “under-penetrated” and caters to the preference of consumers for roomier vehicles, smaller cities will more important for sales, Steve Man, a Hong analyst at Nomura Holdings

The new leadership, helmed by Communist chief Xi Jinping, must the pace of market-driven change to consumer demand and balance the of exports and investment.

China it will seek a higher and efficiency” of growth next and target “sustained and healthy the state-run Xinhua News reported Dec. 16 after a of senior leaders in Beijing.

Economic Status

“The new probably doesn’t want to its tenure with a weak so in China that usually more investment spending,” Bill Russo, president of Limited. “The commercial-vehicle could be a beneficiary of any economic as businesses replace products trucks for construction projects.”

of commercial vehicles, which buses and trucks, are down 6.8 in the first 11 months of this compared with a 7.1 percent in passenger vehicles, according to association data.

The pace of may slow in China if more implement or tighten measures to vehicle populations to curb and traffic congestion.

By 2020, 20 Chinese cities may exceed the density threshold of 250 vehicles per of road, according to McKinsey Co. may prompt officials to impose restrictions to those in Beijing, and Shanghai.

Santana, Skoda

For Germany-based VW, a revamped Santana and expansion of its Skoda brand help the automaker push the less-developed Chinese cities, China Executive Vice Soh Weiming said last was its “bread and butter.”

The company respond to e-mail and phone for comment on its plans for China.

The Santana, which starts at yuan ($13,625) for the revamped is the 10th best-selling car in the country year, according to the auto GM’s Buick Excelle the list, with Ford Co. (F:US ) ’s Focus in second and the Chevrolet Sail and Cruze in and seventh. VW’s Lavida, (PSAT), Jetta, Bora and Motor Co. (005380)’s Elantra Yue make up the rest of the top 10 models.

for VW’s mass-market brand the Czech carmaker that it over after the collapse of rose 6.8 percent to 181,900 in China in the first nine company data show. The became Skoda’s biggest in 2010, three years it started local production.


“Volkswagen is currently in a position they can look with a lot of into the next year,” Klaus Paur, the Shanghai-based head of automotive coverage at Ipsos. “The Volkswagen is quite wide. If you take it a group perspective, maybe could be number one.”

with its joint venture Volkswagen will invest 9.8 euros ($13 billion) in new facilities and products through GM said last year it to invest as much as $7 billion in in the five years to 2015.

GM could fend off VW with new coming up next year, as the Buick Lacrosse and Regal, to IHS.

“We don’t get too hung up on to, in a single year, be too concerned number one position,” Bob Socia, GM president, said in a Dec. 18 in Shanghai. “But make no about it, we’re here to

More Showrooms

GM has the capabilities in dealership and product to compete the “best of them,” he said. The plans to open 400 more across its brands next in China, bringing its total to 4,200 in the world’s largest market.

The Detroit-based automaker’s venture with SAIC and Motors, which builds vehicles, will construct a manufacturing plant in China and production capability to 2 million at the end of 2015.

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In China, Japanese will play catch-up as step up efforts to regain share lost after soared over sovereignty of a of uninhabited islands known as in Japan and Diaoyu in China.

automakers may suffer production into 2014 and lose a 650,000 units in vehicle if tensions don’t abate the two countries, according to IHS estimates.

could hurt Toyota, Motor Co. and Honda Motor Co. plans to reach first-time in smaller Chinese cities, car sales is estimated to grow 10 percent annually till compared with 4 percent in cities like Shanghai and according to McKinsey.

‘Very Tough’

The situation in is still “very tough,” Toyoda, Toyota’s president, on Dec. 20 at a briefing of the Japan Manufacturers Association, which he “I hope for the situation to recover as as possible.”

Sales of Japanese began to show evidence of a in November, according to the Chinese association.

“The winter for brand cars is over,” Dong Yang, secretary of the industry group, in Beijing on 10. “The winter for China’s auto brands continues. may face even more next year than year.”

Chinese automakers’ market share in the first 10 slipped to 41 percent from percent a year earlier, to Mizuho Financial Group (8411)

Market Share

automakers will continue to market share at the expense of Chinese carmakers as the Chinese becomes more sophisticated and between products and brands, Max Warburton, a Singapore-based auto at Bernstein.

Carmakers like VW compete to hold on to existing like Zhou Weiguo and try to win new

“The quality of a Volkswagen car is Zhou, 54, said while in a Volkswagen dealership in Shanghai on a afternoon. “There isn’t of a need for maintenance and the cars age or deteriorate quickly.”

The Shanghai bought his first car — a — more than a ago and plans to stick to the brand. He is the Tiguan SUV to replace his Touran.

“If I had to a brand for my next car, I consider an Audi,” he said.

To Bloomberg News staff for story: Alexandra Ho in Shanghai at

To contact the editor responsible for story: Young-Sam Cho at ycho2@bloomberg.net

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