VW China sales rebound, but market seen slowing

PontiacJ8 · 08-02-2004, 10:46 AM

SHANGHAI, Aug 2 (Reuters) - German auto giant Volkswagen AG's (XETRA:VOWG.DE - News) two Chinese car-making joint ventures saw sales rebound in July after price cuts to ward off rivals helped reinvigorate buyers, but analysts warned of a price war ahead.

Volkswagen's flagship Shanghai plant also beat off a challenge from cross-town rival General Motors Corp. (NYSE:GM - News), surging past it in July after being outsold by the U.S. firm's Chinese venture for the first time in June.

A margin-slicing price war would further pressure foreign car makers, which plan to spend some $13 billion tripling capacity to 6 million cars a year by the end of the decade, and which are already feeling the effects of China's efforts to cool its economy.

While final industry-wide numbers are expected soon, state media are already speculating that for the first time year-on-year sales fell in July.

The number of cars leaving Chinese showrooms in June fell for the third straight month, though it grew slightly on the year, as Beijing put the brakes on auto loans as part of efforts to slow a racing economy.

The market slowdown had prompted a round of price cuts, started by GM in May and followed by Volkswagen in June.

Full Story HERE

tgagneguam · 08-02-2004, 12:48 PM

My guess is that GM will still be able to do well in China despite the fears of a market collapse. It seems that the smaller, less well-connected, and poorly financed homegrown automakers who control about 30%(?) of the market will lose out in a slowing Chinese auto market. The large-volume, wealthy foreign automakers (VW, GM, Toyota, and Ford, to name a few) and some of China's own makes (including SAIC and Geely) will be the beneficiaries of the Chinese auto boom. Then again, that's corporate Darwinism, and it only seems to make sense.

idontcareican · 08-02-2004, 07:34 PM

VW = Horrible quality. Just wait for the power lock and window buttons to start popping out of their assemblies, sunroofs that start failing in the open position and malfunctioning speedometers with check engine lights for GM to get a rebound. If VW hasn’t solved the rampant quality problems and dealer arrogance they had only a few years ago which are starting to roost now then GM should be able to win any long term war with VW. I know VW buyers who will never buy one again after their last experience.

08-02-2004, 10:46 AM	#1 (permalink)
PontiacJ8 6.0 Liter Vortec V8 Join Date: May 2003 Location: Pontiac~Avenue Drives: 1987 Pontiac Fiero 1988 Pontiac Fiero GT Posts: 1,508	SHANGHAI, Aug 2 (Reuters) - German auto giant Volkswagen AG's (XETRA:VOWG.DE - News) two Chinese car-making joint ventures saw sales rebound in July after price cuts to ward off rivals helped reinvigorate buyers, but analysts warned of a price war ahead. Volkswagen's flagship Shanghai plant also beat off a challenge from cross-town rival General Motors Corp. (NYSE:GM - News), surging past it in July after being outsold by the U.S. firm's Chinese venture for the first time in June. A margin-slicing price war would further pressure foreign car makers, which plan to spend some $13 billion tripling capacity to 6 million cars a year by the end of the decade, and which are already feeling the effects of China's efforts to cool its economy. While final industry-wide numbers are expected soon, state media are already speculating that for the first time year-on-year sales fell in July. The number of cars leaving Chinese showrooms in June fell for the third straight month, though it grew slightly on the year, as Beijing put the brakes on auto loans as part of efforts to slow a racing economy. The market slowdown had prompted a round of price cuts, started by GM in May and followed by Volkswagen in June. Full Story HERE __________________

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08-02-2004, 12:48 PM	#2 (permalink)
tgagneguam 7.0 Liter LS7 V8 Join Date: Aug 2003 Posts: 6,951	My guess is that GM will still be able to do well in China despite the fears of a market collapse. It seems that the smaller, less well-connected, and poorly financed homegrown automakers who control about 30%(?) of the market will lose out in a slowing Chinese auto market. The large-volume, wealthy foreign automakers (VW, GM, Toyota, and Ford, to name a few) and some of China's own makes (including SAIC and Geely) will be the beneficiaries of the Chinese auto boom. Then again, that's corporate Darwinism, and it only seems to make sense.

08-02-2004, 07:34 PM	#3 (permalink)
idontcareican 3.9 Liter V6 Join Date: Apr 2004 Posts: 784	VW = Horrible quality. Just wait for the power lock and window buttons to start popping out of their assemblies, sunroofs that start failing in the open position and malfunctioning speedometers with check engine lights for GM to get a rebound. If VW hasn’t solved the rampant quality problems and dealer arrogance they had only a few years ago which are starting to roost now then GM should be able to win any long term war with VW. I know VW buyers who will never buy one again after their last experience.

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