Volkswagen puts on the China big

4 May 2018

The Volkswagen group will bring together two of its China JV, and will focus on crossovers

The Volkswagen brand is launching a strategic plan for China, focused on crossovers and SUVs, and also vehicles with low emissions and an online connection, which should strengthen the brand's position and protect its leadership of the biggest and most profitable market in the world.

The most popular in China passenger car – Volkswagen New Lavida Plus 2018

For today every second VW sold worldwide is sold in China, which on the one hand makes the market the main support of the brand, but also leads to too much dependence on a single, albeit giant of the country. The company controls 13.2% of the local market through two joint ventures, for example, sold in December, more cars than in the US and France together during the past year.

Prolonged slowdown in the overall demand for Volkswagen products or lack of competitive products may damage the global volumes of the brand and wider the entire Volkswagen Group. By the way, the Group's share in the total profit of the Chinese joint venture, including the VW brand in the past year decreased by 4.2% to €4.75 billion (¥36,11 billion at the current exchange rate), as Audi struggled trying to overcome the dispute with its dealers from the joint venture FAW-Volkswagen.

During the ending of last week's Beijing auto show head of sales VW Mr. jürgen Stackmann said that the new marketing strategy Moving Forward, which began last month, is aimed at, that the company remained on top of the rapidly changing market.

He also cited as a positive example of a windfall investment company Geely, owned by Li Shufu has been avtomagnat, which acquired a 9.7% stake in Daimler AG. The company Geely has come from out of nowhere, ahead of all other competitors, including Honda, which has recently recaptured the second position in the market with 6% share, thanks to budget crossover value less than ¥100 000. And, in fact, in 2010, the company Geely is not even included among the eight leading brands in China.

Individual approach

Moreover, Volkswagen is today suffering in the marketing plan because of the peculiar problems of the brand is perceived differently in the market because of its two joint ventures that each sell their own line of models using an independent dealer network, which also compete with each other.

"If you ask people about the brand Volkswagen in China, it will give you three different answers, as there branded lineup, Volkswagen, as well as local products of the joint venture FAW-Volkswagen joint venture of SAIC and Volkswagen. We want our brand to be considered as a whole," said Stackmann, adding that until this account there is not a specific given sales volume or target of the share of each SP.

 One of the symbolic steps as part of the strategy Moving Forward was an appeal to the FAW-Volkswagen and SAIC-Volkswagen to put my rivalry aside and jointly participate at the joint stand of the Volkswagen brand during the Beijing motor show. Stackmann said: "Even if they are combined using the generic brand of the Volkswagen, but each of these manufacturers serves as another major competitor and has an independent distribution network of 1000 dealers each. This is one of the unique characteristics of the Chinese market."

Sedan coupe Volkswagen Arteon in China, sold as the Volkswagen CC 2018

The Beijing JV FAW-VW makes and models such as the North American version of the Jetta sedan sold in China as Sagitar. In turn, the joint venture SAIC-VW offers a different lineup, including the best-selling in China passenger car – sedan VW Lavida.

The head of Volkswagen Brand China Stefan Wallenstein, appointed to this position in 2016, is intended to raise the importance of this country and to give it more regional focus. He's one of the few managers in China with experience of sales in the FAW-Volkswagen and SAIC-Volkswagen. Earlier China had only Director of national sales Jochem Heizman.

Last year, VW has set a new world record, becoming the first brand, which has sold more than 3 million vehicles in one country in a calendar year, said Wellensteyn reporters.

Focusing on crossovers and SUVs

While Volkswagen has shown in Beijing two new sedans – CC, new Lavida, he intends to focus more on crossovers and SUVs.

Popular hybrid crossover Volkswagen Tiguan L PHEV

The Volkswagen brand sells three model lines – Tiguan, mainly in versions with a long wheelbase, midsize Teramont and imported premium Touareg, but before the end of the year the number of models will double. 

New premium Volkswagen Touareg in China is imported, and in the future and will have a hybrid   

So FAW-VW will get its first crossover T-Roc,

Volkswagen T-Roc – the new compact crossover in China

 and another in the fourth quarter of symbiosis crossover coupe, which is called "Advanced Mid-Size SUV". The sixth crossover will be a compact model, now called "Volks-SUV", which to the end of the year will master SAIC-VW.

Alleged crossover look Volks-SUV

According to Wallenstein, these six crossovers will also be doubled to 12 over the next two years, and then one third of all sold in China, VW will be crossovers and SUVs.

Another strategic aspect of the plan will be to deploy by 2020, hybrid and rechargeable vehicles in the line of 10 new models on the basis of conventional cars with internal combustion engines. After that, based on its specifically designed for the electric drive platform MEB will run another 10 models.

 

The prototype crossover Advanced-Mid-Size-SUV presented at the Beijing auto show in April 2018

In addition, VW plans to equip all its models by the end of the year an online connection. According to VW, for example, WeChat in China has 800 million users per month, of which 50% spend 90 minutes to stay in the extremely popular social networking application of Tencent.

Only some of the imported models of the Volkswagen brand and no one of produced by both SP offer built-in online connection. At the moment, for Internet access you can use only embedded product, such as a key with its own separate SIM card.

Therefore, Wallenstein more optimistic about sales next year. He said: "We are seeing moderate growth in 2018, but this leap needs to happen in 2019, when the plug-in hybrids Tiguan Volks-SUVs and T-Roc will be sold throughout the year."

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