China: Volkswagen seeks to expand budget offerings image

The German automaker, which dominates the sales charts when it comes to foreign brands in the world’s largest auto market, is considering an expansion to its planned budget car offering.

The carmaker has been developing and researching the introduction of a budget car in China for years, aimed at competing with the no-frills local brand offerings. Now the make is also mulling the opportunity of delivering affordable sports utility vehicles (SUVs) and multi-purpose vehicles (MPVs) in a sign that it’s carefully watching market shifts. The news comes courtesy of Jochem Heizmann, the company’s China chief executive, with the official telling media the struggle to keep up the sales increases across the Chinese passenger car market during the first three months was hindered by the absence of budget-oriented SUVs and MPVs. “The biggest increase in volume was in budget SUV and MPV segments, where we are not in,” commented the executive. Speaking on the sidelines of the Shanghai Auto Show starting today, Heizmann added the Volkswagen Group has “concrete projects” to end the draught. “We are talking about a product family there. We are not taking about one or two cars,” he added.

Heizmann added that its China business has not only to establish new production facilities and lift its internal production quota, but also pay attention to the market shifts. Retail deliveries of sport utility and crossover vehicles have jumped to 3.82 million in 2014, double from the figure registered back in 2012, surging past the overall market expansion, according to the China Passenger Car Association (CPCA). Forecasts put the segment at 5.2 million units this year, jumping 27 percent from 2014, while sedan sales are only expected to soar by one percent to 12.5 million vehicles.

Via Reuters