VW in China: Strengthening SUV lineup

Launch "budget car" series in 2018

2015/09/30

Summary

Tiguan
The all-new Tiguan at the Frankfurt Auto Show 2015

 Following our "VW Group: Global sales falling from April 2015" issued on September 15, 2015, this report specifies the Volkswagen (VW) Group's efforts in its largest market of China and in the U.S. VWaims to achieve Group sales of one million vehicles and the VW brand's sales of 800,000 units by 2018.


 Since April 2015, the industry-wide monthly sales in China have registered year-on-year (y/y) drops: 7.1% in July and 3.0% in August. The VW Group also posted y/y sales declines, and is reconsidering its plan to build up the annual manufacturing capacity of five million vehicles in China by 2019.

 The VW Group's market share in China is also falling. Demands by model indicate that lack of multi-purpose vehicles (MPVs) and sports-utility vehicles (SUVs) is one of the causes for stagnant sales. The OEM plans to develop a series of low cost budget cars consisting of an SUV, sedan and hatchback and to launch them in China by 2018, possibly in other emerging markets as well.


Related reports:
VW Group: Global sales falling from April 2015 (Sep. 2015)
Sales in China drop to 1.5% growth in first half of 2015 (Aug. 2015)



VW Group sales and market share decrease in Jan.-Aug. 2015

VW Group中国出荷台数とシェア The industry-wide monthly sales in China (on a factory shipment basis, including exports and excluding imports) started to register year-on-year drops from April 2015 and the 2015 first half (January-June) sales posted only 1.5% y/y growth. Downturn in China has continued in July and August and the sales in January to August period stayed on a par with the previous year result.

 The VW Group, a top-seller in China, reported a large drop in sales by 8.4% y/y to 2.2 million units for the January-August 2015 period, which led to the market share decline to 14.6% from 16.0%. The Group heavily depends on the Chinese market: in 2014, its vehicle sales in China accounted for 39% of its global sales. According to a report, more than 50% of the Group's income comes from China, including equity income and royalties from its joint venture s and parts sales to them.

 In response to such sales declines, the VW Group started production cut in June, presumably continuing it in August by increasing number of closed days at some of its plants.

 According to the VW Annual Report 2014, the OEM planned to invest a total of EUR 22 billion in production facilities and product development in China in 2015 through 2019 in order to increase production capacity to five million units by 2019. The Group, however, has become cautious about the plan based on the sales situation in the first half of 2015, saying, "The VW Group will never build excessive production capacity in China."

VW Group sales and market share in China

2010 2011 2012 2013 2014 Jan.-Aug. 2014 Jan.-Aug. 2015 Change
VW Group vehicle sales 1,871,336 2,200,715 2,608,896 3,037,895 3,505,893 2,402,373 2,200,364 -8.4%
VW Group market share 10.4% 11.9% 13.5% 13.8% 14.9% 16.0% 14.6%
Total industry volume in China 18,061,936 18,505,114 19,306,435 21,984,079 23,491,893 15,016,864 15,022,345 0.0%
VW Group monthly sales in 2015
Jan. Feb. Mar. Apr. May Jun. Jul. Aug.
VW Group vehicle sales 397,209 272,699 292,886 272,301 269,248 238,542 200,561 256,918
VW Group market share 17.1% 17.1% 13.1% 13.7% 14.1% 13.2% 13.3% 15.4%
Total industry volume in China 2,319,611 1,593,301 2,240,556 1,994,507 1,903,774 1,803,090 1,503,017 1,664,489

Source: MarkLines Data center Note: The above vehicle sales are factory shipment volumes including exports but not imports. They do not correspond to the delivery figures released by the VW Group, stated in our VW Group (Part 1) report issued on September 15, 2015.

 

 



VW Group plans to introduce new models in growing SUV & MPV market in China

中国乗用車市場車型別構成 In the Chinese auto industry, passenger cars are categorized in four vehicle type: MPV, SUV, sedans & hatchbacks, and mini vans. The industry-wide MPV sales expanded from 450,000 units in 2010 to 1.91 million units in 2014, partly because some mini vans were reclassified as MPV from 2013. The industry-wide SUV sales surged from 1.33 million units in 2010 to 4.08 million units in 2014. In January-August 2015, SUV sales reported y/y increase to 3.51 million units from 2.42 million units, while sedans and hatchbacks dropped sales y/y to 7.24 million units from 7.92 million units.

Passenger car sales by type in China

Vehicle type 2010 2011 2012 2013 2014 Jan.-Aug. 2014 Jan.-Aug. 2015 Change
MPV 445,407 497,708 493,396 1,305,181 1,914,255 1,146,500 1,261,562 10.0%
SUV 1,326,036 1,593,714 2,000,410 2,988,758 4,077,897 2,427,700 3,507,428 44.5%
Sedan and hatchback 9,494,269 10,122,703 10,744,740 12,009,704 12,376,702 7,920,200 7,239,172 -8.6%
Mini van 2,492,082 2,258,291 2,256,694 1,625,215 1,331,715 965,100 773,527 -19.9%
Total 13,757,794 14,472,416 15,495,240 17,928,858 19,700,569 12,459,500 12,781,689 2.6%

Source: MarkLines Data Center

 

VW Group乗用車車型別構成 The VW Group lineup provides only one MPV, the VW Touran; and three SUVs, the VW Tiguan and the Audi Q3/Q5. In January-August 2015, the Group sold 24,000 MPVs and 290,000 SUVs. The y/y drop of 187,000 units in sedan & hatchback sales is a major reason for the decreased passenger car sales.

 The Chinese brand OEMs have launched many low-priced MPVs and SUVs: In January-June 2015, seven Chinese brand SUV models were in the top ten SUV models sold in China and nine Chinese brand MPV models were in the top ten of the MPV category. Although foreign brands accounted for all the top ten models in sedan & hatchback category, the sedan & hatchback market itself has been shrinking.

 The VW Group plans to introduce the next Touran MPV in 2015 and the next Tiguan SUV and a medium SUV in 2017.

VW Group passenger car sales by type

Vehicle type 2010 2011 2012 2013 2014 Jan.-Aug. 2014 Jan.-Aug. 2015 Change
MPV 22,037 31,241 36,044 35,310 34,984 24,490 23,803 -2.8%
SUV 102,938 187,804 263,219 344,938 448,006 305,138 291,176 -4.6%
Sedan and hatchback 1,746,361 1,981,670 2,309,633 2,657,647 3,022,903 2,072,745 1,885,385 -9.0%
Total 1,871,336 2,200,715 2,608,896 3,037,895 3,505,893 2,402,373 2,200,364 -8.4%

Source: MarkLines Data Center

 

 



VW Group to launch "budget car" family of SUV, sedan and hatchback in 2018

 The VW Group has been planning to develop a series of low cost budget cars consisting of an SUV, sedan and hatchback. The Group is now expected to launch the series in China as early as 2018, possibly also in India, Central and South America and Eastern Europe in the future. There is no current plan to sell them in Western Europe.

 About two years ago, the Group targeted a price of between EUR 6,000 and 7,000, approximately between $6,500 and $7,600, for the series. It is reported, however, that the OEM has revised the price upward to EUR 8,000 to 11,000 ($8,600 to $11,900), considering the quality and profitability. It is also considering a new brand for this budget car family, as Nissan's Datsun. In such a case, this will become the VW Group's 13th brand.

 

 



Statistics

VW Group sales by type in China

Vehicle type Brand Model 2010 2011 2012 2013 2014 Jan.-Aug. 2014 Jan.-Aug. 2015
MPV VW Touran 22,037 31,241 36,044 35,310 34,984 24,490 23,803
VW sub-total 22,037 31,241 36,044 35,310 34,984 24,490 23,803
MPV total 22,037 31,241 36,044 35,310 34,984 24,490 23,803
SUV Audi Audi Q3 0 0 0 38,945 87,311 56,667 41,679
Audi Q5 32,483 58,632 90,157 102,121 106,999 68,697 71,199
Audi sub-total 32,483 58,632 90,157 141,066 194,310 125,364 112,878
Skoda Yeti 0 0 0 4,090 16,292 11,540 6,634
Skoda sub-total 0 0 0 4,090 16,292 11,540 6,634
VW Tiguan 70,455 129,172 173,062 199,782 237,404 168,234 171,664
VW sub-total 70,455 129,172 173,062 199,782 237,404 168,234 171,664
SUV total 102,938 187,804 263,219 344,938 448,006 305,138 291,176
Sedan and hatchback Audi Audi A3 0 0 0 0 32,034 12,369 38,212
Audi A4 58,466 87,262 100,519 121,804 120,193 76,018 71,916
Audi A6 115,353 111,806 138,024 148,130 166,463 112,963 92,660
Audi sub-total 173,819 199,068 238,543 269,934 318,690 201,350 202,788
Skoda Fabia 39,278 48,759 48,380 33,554 19,465 14,433 11,449
Octavia 113,226 126,450 137,616 120,246 120,509 68,044 92,147
Skoda Superb/ New Superb 37,796 44,800 44,007 37,258 29,646 19,710 9,623
Rapid/Rapid Spaceback 0 0 0 36,052 96,478 64,834 47,407
Skoda sub-total 190,300 220,009 230,003 227,110 266,098 167,021 160,626
VW Passat GP 130,971 68,061 22,754 22 1 0
CC 17,353 36,576 37,589 41,161 47,892 32,247 19,548
Cross Polo 11,882 178 17,909 18,730 18,784 13,569 11,609
New Santana 0 0 2,919 177,528 285,293 211,899 176,898
Santana 98,363 95,819 101,385 3,089 8 8 6
Gran Santana 6,927
Santana Vista 111,781 108,170 98,484 62,732 21,993 21,990 7
Golf 57,518 100,020 127,376 101,802 193,047 124,235 122,657
Jetta 224,523 217,861 242,528 263,408 296,960 204,098 184,119
New Polo 8,177 122,242 118,849 132,019 136,599 92,769 110,163
New Bora Model X 172,537 207,041 222,735 237,156 222,663 159,909 121,856
New Passat NMS 0 97,797 210,567 227,240 218,343 157,511 141,598
Sagitar 112,887 128,325 196,296 271,188 300,082 207,989 172,996
Lamando 0 0 0 0 29 0 58,073
Lavida 251,615 247,475 246,687 374,056 371,962 256,561 234,393
Gran Lavida 0 0 0 59,814 114,840 76,252 61,414
Polo GP 2Box/3Box 105,776 45,663 21,345 3,486 2,376 1,680 672
Magotan 78,859 87,365 173,664 187,172 207,243 143,657 99,035
VW sub-total 1,382,242 1,562,593 1,841,087 2,160,603 2,438,115 1,704,374 1,521,971
Sedan and hatchback total 1,746,361 1,981,670 2,309,633 2,657,647 3,022,903 2,072,745 1,885,385
VW Group passenger car Total 1,871,336 2,200,715 2,608,896 3,037,895 3,505,893 2,402,373 2,200,364

Source: MarkLines Data Center Note: The VW Group sells several thousand units of commercial vehicles per year in China. As all of them are imports, the above figures do not include them.

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