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VW reports recovery momentum after China sales drop 17% in H1

VW reports recovery momentum after China sales drop 17% in H1
Photo courtesy of VW

In the first half of 2020, the Volkswagen Group together with its Chinese joint ventures delivered 1.59 million (-17.0%) vehicles in the Chinese mainland and Hong Kong, including around 69,600 imported vehicles.

With a steady recovery trend being seen after the economic hit from the global pandemic, the Volkswagen Group has maintained its positive market share growth of 1.2 percentage points year-on-year (YoY), nearly 20% of the market.

Strong brands Audi, Porsche, Bentley, Volkswagen and JETTA, the newest Volkswagen brand family member continue to show great resilience despite the effects of the pandemic, while the latter proving itself to be highly competitive within its segment.

Volkswagen Group China CEO Dr. Stephan Wöllenstein said “while dealerships are reopened and production is back at normal levels, we continue to see an encouraging recovery trend among the premium and volume segments, areas of the market with a strong Group presence. Our SUV strategy has remained a key area of success for the Group with 9.3% growth YoY in this segment, where VW brand consolidated its leading position to be No. 1 SUV choice for Chinese consumers.”

“YoY VGC NEV [new energy vehicles] sales is to grow to more than twice of 2019. Looking further ahead, we keenly anticipate the start of MEB production at our Anting and Foshan plants in October and market launch of the first ID model in China. Meanwhile, the Group’s e-mobility strategy has been greatly enhanced with the investment in JAG/JAC and Gotion, aligning us and partners for the coming NEV era and subsequent battery demand.”

The impact of COVID-19 on the Group early in the year has catalyzed an evolution towards ever increasingly digitalized sales and marketing strategies, from livestreaming training courses for dealers to a number of highly successful online product launches, such as the JETTA VS7, VW Viloran and Tayron GTE, watched by millions around the country. Despite challenges, the planned product launches for the first half of the year have gone ahead on schedule.

Volkswagen brand, and its JETTA sub-brand, delivered 1,167,800 vehicles in the first half of 2020. The brand demonstrated its resilience during special times, and remained the number 1 choice for Chinese car buyers. From January to June, 67,600 of JETTA were sold, which equals roughly 1% of the world’s largest auto market. The sub-brand successfully offers entry-level individual mobility in China.

Audi has seen strong recovery in market performance since the second quarter, with 302,500 deliveries made in the first half of the year. After a significant hit in February and March 2020, the brand delivered its strongest ever China results for May and June. In addition to A6L, A4L, Q5L, the Audi Q8 is also a very popular choice among Chinese customers.

ŠKODA delivered around 77,400 vehicles to customers in the first half of 2020. To support customers and the speedy recovery of the automotive market, ŠKODA rolled out several initiatives at the end of April. It optimized prices across the brand’s entire range of models and also provided attractive financing offers such as zero-interest rate financing. The brand has witnessed positive customer feedback, including higher numbers of visits to its website and dealers as well as a recovery of deliveries in May and June.

Porsche concluded the first half with 39,600 deliveries. Remaining the largest single market, China became Porsche’s first global market to gradually and cautiously step out of the shadow of the coronavirus. Deliveries between March and May maintained their growth momentum, and the order intake for June hit a new historical high despite a dip in deliveries due to restrained product supply.

Despite the impact of COVID-19 in the first half of 2020 in China, the Volkswagen Group China has seen a trend of recovery from month to month since April. In June, deliveries were slightly below last year. This was expected due to the change of emission standards to China Six (C6) last July which led to a boost in sales in June 2019. However, this is no sign of slowdown of recovery. Volkswagen Group China expects that deliveries to Volkswagen Group customers in 2020 will be slightly higher than the total market despite market conditions that remain challenging.

Meanwhile, Volkswagen AG and its Chinese joint venture partner SAIC Motor plan to invest CNY4.13 billion (USD591 million) to revamp their car plants in Shanghai to make new Audi sedans, according to a report from Reuters. The revamp is expected to be completed by the end of 2020.
SAIC Volkswagen, the joint venture of the German automaker and China’s biggest automaker, currently only sells cars under the Volkswagen and Skoda marques. Audi is Volkswagen’s luxury car unit.

With the revamp at its Shanghai plants, the joint venture is aiming for an annual manufacturing capacity of 60,000 Audi A7L sedans and 60,000 new Volkswagen sport-utility vehicles. The total capacity at the plants will remain unchanged. The joint venture sold two million cars last year.