Volkswagen expects China to overtake Germany as its biggest market this year, the company's chief executive said yesterday.
"I take the Chinese market as our second home market. My estimation is that Volkswagen's sales in China will overtake that of Germany's this year," said Martin Winterkorn, CEO of Volkswagen AG.
Last month, the German carmaker sold 112,466 cars in China, breaching for the first time the 100,000-unit mark for single month sales.
All three locally produced brands - Volkswagen, Audi and Skoda - recorded their strongest sales in March. The company said it sold 92,969 Volkswagens, 11,848 Audis and 7,610 Skodas in the country last month.
The spurt in numbers came at a time when China's monthly automobile sales touched a record 1.11 million vehicles in March, exceeding US sales for the third month in a row, as tax cuts and rebates for small car purchases lured buyers back into showrooms.
"The development of the total passenger car market in the first quarter has exceeded our expectations and we benefited successfully from this growth trend," said Winfried Vahland, president and CEO of Volkswagen Group China.
"With our performance, we have created a respectable base for future growth. We have corrected our forecast for 2009 and have raised our production planning by an additional 50,000 units."
Volkswagen will invest $1 billion in China in 2009-10. The money will be used for new technologies, introduction of new products, brand building and sales channel upgrades, said Winterkorn.
Volkswagen Group China, along with its two joint ventures, Shanghai Volkswagen and FAW-Volkswagen, delivered 284,143 cars in total in the first quarter to buyers on the Chinese mainland and Hong Kong, 6 percent more than the 268,204 cars it sold in the first three months of 2008.
China has halved purchase taxes on cars with engines of or less than 1.6 liters and planned a 5-billion yuan subsidy program to boost vehicle sales in rural regions.
"Volkswagen Group fully supports the Chinese government's policy to encourage production of vehicles under 1.6-liter engine displacement as well as other measures to boost automobile sales," Winterkorn said, indicating that Volkswagen would also benefit from the measures.
"Volkswagen's product strategy, which always caters to local requirements, has been proved to be effective," said Zhong Shi, an independent auto analyst.
Volkswagen in late February announced an ambitious plan to double its annual vehicle sales in China to 2 million units by 2018, promising to add four models to its lineup each year.
This month, its US rival General Motors, also said that it aimed to double its China annual sales to 2 million units, with more than 30 new or upgraded models to be launched over the next five years.