Limited SUV range will put brakes on sales drive
Germany-based vehicle maker Volkswagen AG (VW) announced Monday that its first-quarter sales in the Chinese market rose 6.4 percent year-on-year to a record 955,500 units, but analysts warned that VW will find it tough to top the sales ranks this year due to limited offerings of sport utility vehicles (SUV).
The company's China sales fell 3.4 percent in 2015. But it started to pick up in the fourth quarter of 2015, analysts said, after the Chinese government announced tax breaks for small-engine vehicles.
Under that policy, which took effect on October 1, 2015 and runs to the end of 2016, the purchase tax for vehicles with an engine capacity of no more than 1.6 liters was halved.
"Most best-selling models of VW fall into that category," Zhang Yu, managing director at consultancy Automotive Foresight (Shanghai) Co, told the Global Times Monday.
Wu Shuocheng, a Shanghai-based independent auto analyst, noted that VW's strong performance shows that its emissions scandal, which broke out in the US, has had little impact on its China sales.
Despite the pickup in the fourth quarter, VW's sales in China totaled about 3.55 million units in 2015, ranking No.2 after General Motors' (GM) total China sales of about 3.61 million units. In the first quarter of this year, GM's sales were also slightly higher - with about 964,000 units sold in the Chinese market, up 0.2 percent on a yearly basis.
"It will be hard for VW to take the top spot this year due to weak offerings of SUVs," Zhang said, adding that GM has been stronger in the segment.
Though VW's Tiguan SUV ranked No.2 among all SUV models in China in 2015, the company has developed a sense of urgency in building up the segment. It will increase its range of SUVs in the market in the next three to four years, with 10 models being produced locally, Jochem Heizmann, the company's China head, was quoted as saying in a statement VW sent to the Global Times Monday.
Wu said that VW has been fast in rolling out new models.
"I believe that the future SUVs of VW will also be very competitive," he said.
In the first quarter, China's passenger car sales increased 6.75 percent year-on-year to 5.67 million units, according to data from the China Association of Automobile Manufacturers.
Sales of SUVs surged 51.46 percent year-on-year to 1.96 million units, the association said.
For the full year, the growth rate for the passenger car sector will be close to the figure in the first quarter, ranging from 6 percent to 8 percent, Wu said.
The rapid momentum in the SUV sector will continue for a couple of years, Wu noted.
