Dusseldorf Volkswagen draws new confidence in the important Chinese car market. VW China boss Stephan Wöllenstein said at a press conference in Beijing on Friday: “The economic indicators are moving in the right direction.”
There is a good chance of making up for the losses from the first half of the year and achieving a comparatively decent result for the year as a whole. A number of regions in China had come to a standstill in the spring due to the corona lockdowns. This also affected the automotive industry and especially market leader Volkswagen.
The macroeconomic consequences are serious. The second largest economy in the world grew by only 0.4 percent in the second quarter of 2022 compared to the same period last year. Compared to the previous quarter of this year, the Chinese economy shrank by 2.6 percent.
The VW Group hopes that the government’s draconian Covid measures will not be repeated anytime soon. Wöllenstein expects that China’s leadership cannot afford such severe interventions as in April and May for economic reasons alone.
The social balance in the People’s Republic could also be endangered. The VW China boss expects that if the number of Covid cases increases again, there will only be smaller regional lockdowns and no more nationwide closures.
Volkswagen grew by 27 percent in June
The fact that Volkswagen China is now more confident is based on good sales results in June. In the third month of the spring quarter, new car sales across the country rose again.
After the lockdowns in April and May, an improvement was generally expected. According to the industry association PCA, almost two million vehicles were sold throughout China in June. This is an increase of 22 percent compared to June of the previous year and 43 percent more than in May 2022.
The figures for market leader Volkswagen have also developed accordingly. In June, the entire group (VW, Porsche, Audi, Skoda) sold around 340,000 vehicles, which corresponds to an increase of 27 percent compared to the same month last year and an increase of 47 percent compared to May 2022.
VW manager Wöllenstein was satisfied: “We have remained the market leader.” The entire group currently has a market share of 15.5 percent. In the first six months, the group was able to sell 1.47 million cars in China. Compared to the first half of 2021, this is a decrease of around 20 percent.
The Wolfsburg car manufacturer is dependent on positive reports from the People’s Republic. With a share of around 40 percent, China is the most important sales market for Volkswagen. Three to four billion euros in earnings are transferred from there to Germany every year.
Wöllenstein wants to double the sales volume of the ID series
Volkswagen is now hoping that the recent signs of recovery will continue in the coming months. “We want to catch up as much as possible,” emphasized Wöllenstein. Production has been ramped up again at all locations in China. If possible, production will again be carried out in three shifts. Before the Covid-related closures in spring, Volkswagen had set itself the goal of selling as many cars this year as in 2020.
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With the current upturn, this goal has become achievable again, says Wöllenstein: “The logistics chains are also working normally again.” The state is also helping with subsidies. In 2020, the VW Group sold around 3.9 million vehicles in China. The supply crisis for semiconductors is still noticeable, but here too there are signs of improvement.
After initial problems, Volkswagen is also making progress with the electric cars, which are becoming more important. Wöllenstein explained: In June, the VW brand sold 17,000 electric models from the ID series in China.
Volkswagen’s China boss is sticking to his goals.
(Photo: dpa)
The brand aims to achieve similar sales figures in the coming months. As planned, Volkswagen will double the sales volume of the ID series compared to the previous year, when around 70,000 cars were sold.
Volkswagen is considering acquiring software companies
The car company’s strong market position in China is based on sales successes in recent years, when there were only cars with internal combustion engines. However, similar successes are not guaranteed with the new electric cars. Because VW is facing Chinese providers of electric cars such as BYD, Xpeng or Nio, who are reporting strong sales figures. The US manufacturer Tesla has its own plant in China.
In addition, Chinese car buyers increasingly criticized Volkswagen for the unconvincing digital equipment of its ID models. They demand more software and IT in the vehicle. The models from VW only met the expectations of European customers.
Volkswagen therefore wants to expand its own software departments in China. The number of developers is to be doubled to 1,200 by the end of the year. The Wolfsburg hope that they will be able to fulfill the wishes of Chinese customers more easily.
Special ID store in the center of Chengdu: Volkswagen wants to sell more of its electric cars in China in the second half of the year.
(Photo: Reuters)
Wöllenstein not only announced new hires. The takeover of other software companies is also possible. “More news can be expected in the second half of the year,” he said. Special ID shops should also boost sales of e-cars. 300 of these are planned by the end of the year.
>> Read here: Which software problems the entire VW group has
Business in China is also more important within the VW Group. Ralf Brandstätter, who was previously CEO of the Volkswagen brand in Wolfsburg, will become the new China board member on August 1. The car manager is also a member of the group board. This is intended to demonstrate to the political leadership in Beijing how important the VW Group is to business in China. The previous head of China, Wöllenstein, was not a member of the group board.
Wöllenstein also repeated that VW is sticking to its controversial plant in the Chinese province of Xinjiang. A closure is not planned. Together with its Chinese joint venture partner SAIC, the group has decided to reduce production figures at the plant.
Volkswagen had been criticized by many politicians in Germany because of the factory. The Chinese government is committing serious human rights violations in Xinjiang province against the Muslim Uyghur minority.
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