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VW predicts small growth for Chinese auto market into early 2020s

2020-03-20 11:49 Friday


Volkswagen, the top foreign producer of automobiles in China, has said it expects the country's passenger car market to stabilize in 2020, followed by slow growth for the following 3 to 4 years.

Vehicle sales in the world's biggest market are expected to fall by some 8% in 2019 after a 2.8% fall last year to 28.1 million. That was the first decline since the previous decade.

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The chaotic implementation of new emission rules and the U.S.-China trade war have been compounded by a slowing economy in the Middle Kingdom.

VW Group China CEO Stephan Woellenstein told reporters: "Next year we're predicting a stable total market environment, maybe moderate small growth."

He added: "China might grow at a relatively low pace until around 2023 or 2024, till we come back to the level of 2017. Then we would also see a continuation of growth."

VW has been one of the best performing automakers in China in the past few months, having launched 8 locally-manufactured SUVs since the Q4 2018.

The firm's China vehicle sales climbed 6.7% in October. They are down 1.8% for the year to date, but that is much better than a 12% industry-wide decline in passenger car sales in the country over the same period.

The carmaker has taken China to be a key battleground as it drives ahead with electric models, pouring billions of dollars into product R&D.

It predicts to sell around 500,000 new energy vehicles (NEVs) annually in China within 4 years, many of which will be part of its new 'ID' family of battery-powered cars.

Woellenstein remarked: "We strongly believe ID family electric vehicles will be the new mass market cars for VW in China."

In 2017, it unveiled a plan to sell 1.5 million NEVs, which also include hybrid plug-in cars, each year nationwide by 2025.

To do so, it has constructed a U.S.$ 2.5b green vehicle plant with partner SAIC Motor. It will have a yearly output capacity of some 300,000 cars and started trial production earlier in November. It's also upgrading manufacturing facilities in Foshan with partner FAW Group to build electric-powered vehicles.

Volkswagen is set to invest over U.S.$ 4.4b in China in 2020, following similar spending this year. VW AG and its Chinese JV hope to ramp up NEV production and add more SUVs to its roster, defying a broader industry downturn.

Volkswagen China chief Stephan Woellenstein said in a statement: "Of course, we closely watch the up- and down-turns of the NEV market."

"Still, its ongoing long-term growth excites us, as our electrification accelerates."

Increased green offerings will be a key component of VW's expansion plans and the NEV product category accounts for a majority of expected investments by the firm. Woellenstein added: "We generally foresee spending more on NEVs than on fuel cars."

As China rolls back subsidies for electric vehicles, Woellenstein stated that the government should encourage the sector in other ways, for example by not restricting green purchases in crowded first-tier cities and offering urban electric vehicle owners more driving days than those allowed for fossil fuel cars.


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