Volkswagen China cannot meet sales target this year – might have to subsidise dealers instead

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It now appears unlikely that Volkswagen will achieve its sales targets in China by year’s end. Sales figures for the first half of the year have not been particularly rosy, prompting Volkswagen AG to pump in money to subsidise its dealers in China. Based on industry data, the group’s sales in China have seen a drop of 10% for the first six months of 2015.

According to a report by Bloomberg Business, sources have revealed that Volkswagen AG is said to be pushing financial assistance amounting to some 1 billion RMB (RM610 million) to its dealers in China to help them cope with a slowing market. “Dealers are facing some hardships,” Li Pengcheng, spokesperson for FAW-Volkswagen said.

In April this year, Jochem Heizmann, CEO of Volkswagen Group China, had already indicated that the slow demand for the year would not get better due to the absence of a budget SUV and MPV from the group’s product range, especially at a time when there’s a sudden upsurge in appetite for the likes of the two.

In the same report, Janet Lewis, analyst at Macquarie Group Hong Kong, also shared the same view. “Volkswagen has been under particular pressure due to its lack of SUV products at a time when SUVs are growing much faster than the overall market,” Lewis said, supporting Heizmann’s statement.

Will the introduction of new SUVs help the company compete against the likes of the Honda HR-V, Subaru XV and similar urban rivals? Perhaps the question boils down to how much Volkswagen’s very own version will cost its buyers.

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Graham Chin

Having spent a number of years as a journalist for a local paper, a marketing executive for a popular German automotive brand and a copywriter, Graham, a true-blue Sarawakian, knew he had to take the leap back into the motoring scene - and so he did. To him, nothing’s better than cruising for hours along a scenic route, in a car that’s designed and built for that purpose.

 

Comments

  • The beginning of the end?

    Like or Dislike: Thumb up 9 Thumb down 0
  • Mann Bell on Jul 10, 2015 at 6:03 pm

    mati2 aku ingat tu honda accord!

    Like or Dislike: Thumb up 5 Thumb down 1
  • Wah! So good china dealers dun meet sales target get tongkat instead of fry sotong!

    Like or Dislike: Thumb up 8 Thumb down 0
  • WaJib on Jul 10, 2015 at 6:34 pm

    DSG kaput..

    Like or Dislike: Thumb up 10 Thumb down 1
    • Cannot post using the name. on Jul 13, 2015 at 3:11 pm

      DSG is not kaput. My bro been driving jetta for nearly 2 years yet never heard of DSG issue.

      Like or Dislike: Thumb up 0 Thumb down 1
    • ehsan on Jul 16, 2015 at 1:14 pm

      YOU KAPUT DSG PUN BELUM KAPUT.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Das Autar on Jul 10, 2015 at 7:40 pm

    What are they talking about? No SUV/MPV? Then Tuareg, Tiguan, Sharan and Touran is what then? S**t Utility Vehicle? Simply find something to blame only.

    Like or Dislike: Thumb up 2 Thumb down 3
  • Allroadquattro on Jul 10, 2015 at 9:40 pm

    not just VW. car sales in china are plunging. meanwhile no compensation for Takata exploding airbag. (i’ve been reading all these thing on Jalopnik.)

    Like or Dislike: Thumb up 3 Thumb down 3
  • GavinY on Jul 11, 2015 at 8:07 am

    Divert to malaysia , malaysia cannot get enough of Volkswagen , even if you give them the most lemon p.o.s they will still justify ‘handling, continental , German quality, ‘

    Lol

    Like or Dislike: Thumb up 6 Thumb down 1
  • Heng Lee on Jul 11, 2015 at 3:18 pm

    “Toyota China car sales weak in first quarter

    Sales of automobiles in China by Toyota Motor Corp (7203.T) and its two Chinese joint ventures fell 20.9 percent in March, while those for the first three months of the year slipped 0.1 percent.”

    http://uk.reuters.com/article/2015/04/01/uk-toyota-china-sales-idUKKBN0MS3HG20150401

    No DSG, but Toyota’s sales in China are worse than VW’s? How come? ;)

    Like or Dislike: Thumb up 4 Thumb down 3
    • u are so smart to do research. but not smart to find the reason?

      it’s because of anti japanese sentiment.
      all japanese brand suffering @ china.

      Like or Dislike: Thumb up 2 Thumb down 2
      • Heng Lee on Jul 12, 2015 at 5:14 pm

        I see…

        BTW: Why Toyota is suffering in Europe and South America too?

        Is there “anti japanese sentiment” in this parts of the world too?

        Like or Dislike: Thumb up 4 Thumb down 1
 

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