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July 21, 2015

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Home » Business » Auto

Volkswagen China car sales hit by slowdown

By Anna Lu | July 21, 2015, Tuesday | Print Edition

China, the world’s biggest auto market currently in the throes of slowdown, has become a drag for Volkswagen, which had set a target to outsell Toyota, the world’s biggest carmaker by sales volume.

In the first half of this year, Volkswagen’s global deliveries shrank 0.5 percent from a year earlier to 5.04 million units as performance in China, its largest sales contributor, fell 3.9 percent to 1.74 million units, the company said yesterday.

That lagged the Chinese market’s 1 percent growth in general, which is itself in a dramatic slump from a compound average growth of 16.6 percent from 2005 to 2014.

A 48 percent surge in SUV sales in China was the only bright spot in the first half of this year. And with just one localized SUV in its Volkswagen brand’s portfolio here, the wheels of fortune have been on downward spiral for the company.

Sourcing about 30 percent of its sales from China, Volkswagen has a bigger risk exposure from the economic slowdown than its biggest rival Toyota, which accounts for only 10 percent of its sales in China.

Carmakers and dealers are trying to sail through the market downturn together. Volkswagen’s Audi brand has set aside a 1.2 billion yuan (US$193 million) subsidy plan for its cash-tight dealerships.

Earlier this month, BMW announced up to 2 billion yuan reward package for sales achieved by dealers in the second quarter. That was on top of the 15 percent quarterly sales target reduction.

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