Report – Volkswagen ready to improve margins with China exclusive premium sedan image

Volkswagen AG has counted on the world’s No.1 auto market to assist the company in securing the position it now holds globally, second only to Japan’s Toyota and ahead of America’s General Motors.

Now, the German group wants to further establish its position on the Asian market with a China-only luxury sedan to be launched sometimes next year, according to a report coming from Reuters. Two sources that have information said the Volkswagen-badged model is heading to China to cater for the brand’s pursuit of higher margins. You may recall the fact that VW AG is battling sliding earnings from the core brand, with a cost cutting plan in tow.

The move to unveil a VW luxury sedan could prove disruptive within the group though, as the move would pit the model against the similar offerings from Audi, the company’s traditional premium unit. The new sedan would actually be based on the Audi A6, in a move that VW AG also used previously in Europe, when the Seat Exeo was unveiled as an internal copycat to a previous generation Audi A4.

“Volkswagen wants to boost its brand value, which is natural for any company seeking higher margins. But it’s not easy,” said Yale Zhang, managing director at consultancy Automotive Foresight. “If Volkswagen’s premium car is priced too high, people would go straight to Audi. If the price is not high, then what’s the point?”

Audi’s A6 sedan, priced from 383,000 yuan ($62,375), is China’s best-selling premium sedan, and the model is larger than the global version, catering for the Chinese-specific desire to usually rely on the use of a chauffeur.

Via Reuters