According to international media reports, Volkswagen, the German automotive giant, is now exploring the possibility of manufacturing Skoda-branded vehicles and heavy trucks in China. This marks a significant shift for the company, as it seeks to maintain its dominance in one of the world's fastest-growing auto markets. By introducing the affordable and large-scale Skoda Octavia, Volkswagen aims to strengthen its position in the Chinese market and add a third brand to its portfolio alongside Audi.
The automaker is currently in discussions with Chinese partners regarding the production of heavy trucks, a move that could represent the first direct challenge by a Western automaker against locally produced, low-cost trucks. Currently, Swedish brand Volvo dominates the high-end truck segment in China, but Volkswagen hopes to change that dynamic.
Volkswagen CEO Peter Biede admitted that the introduction of the Polo model in China was a misstep. "Frankly, launching the Polo in China was a complete mistake," he stated. "The market is looking for a simple, large car, but the Polo is a complex, small vehicle." With increasing competition from GM, Toyota, and Honda, along with heavy investments in the local industry, Volkswagen’s market share in China has been declining. The poor performance of the Polo has further weakened the brand's standing, with sales only reaching two-thirds of the target.
Biede emphasized that while the company aims to maintain a 30% market share, it will not sacrifice profitability to achieve this. According to data from the "Automotive Industry Information," the public (Volkswagen) currently holds a 26.4% market share. Despite plans to invest 6 billion euros to double production capacity by 2007, the company insists there will be no overcapacity risk.
He also pointed out that the recent slowdown in China's auto sales growth—dropping from 45% to around 15-20%—may be due to consumer demand for lower prices rather than an economic slowdown. "It's not about slower growth, but more about pricing pressure," he added.
Source: International Finance News
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