China: Volkswagen’s issue here has to do with sales, not pollution image

The company’s biggest business crisis in its 78-year history should be a distant revelation to Volkswagen chief executive officer Matthias Mueller while on a lucrative visit in China, the world’s largest auto market.

Here instead it should concentrate on deliveries – China is the automaker’s largest market and thankfully no more than 2, 000 autos use diesel powertrains and have the VW badge in the country. Starting Thursday, Mueller has travelled alongside other chief executives and German Chancellor Angela Merkel to China on a visit and can enjoy a respite as the company’s diesel sales are virtually inexistent. Diesel fuel in China has been eschewed by consumers for being too dirty so the carmaker could have no regulatory issue due to its admitted cheating on diesel emissions tests in the US. But nonetheless the country’s environmental protection ministry announced an investigation and the company image has been smeared during the past few years by a series of recalls.

The impact on sales is obvious though – VW AG through its combined 17 percent market share of Volkswagen, Audi and Skoda branded vehicles remained the leader during the first nine months of the year. But that was down from 19 percent during the same period of 2014 and the namesake VW band has collapsed during the timeframe by 8.5 percent while the overall industry has soared 2.5 percent. The company also suffers from not being positioned well in the only segment that has enjoyed tremendous growth across the board this year – sport utility vehicles.

Via Bloomberg