According to recent international media reports, Volkswagen, the German automotive giant, is exploring the possibility of manufacturing Skoda-branded vehicles and heavy trucks in China. This marks a significant shift for the company as it aims to maintain its dominance in one of the world's fastest-growing auto markets. Introducing the Skoda Octavia, known for its affordability and large size, into the Chinese market could strengthen Volkswagen’s presence and add a third brand to its portfolio alongside Audi.
Currently, Volkswagen is in discussions with local partners regarding the production of heavy trucks, a move that would make it one of the first Western automakers to directly compete with locally manufactured, cost-effective truck models. At present, Swedish automaker Volvo dominates the high-end truck segment in China, but Volkswagen’s strategy seems to target a broader consumer base.
Volkswagen CEO Peter Biedemann stated that bringing the Skoda brand to China—whether through Skoda or the Audi line—could help offset the poor sales performance of the Volkswagen Polo. “Frankly, launching the Polo in China was a big mistake,†he admitted in an interview. He explained that the Chinese market prefers larger, simpler vehicles, while the Polo is seen as a complex, compact car. With growing competition from General Motors, Toyota, and Honda, and increased investments in the Chinese auto sector, Volkswagen’s market share has been steadily declining.
The Polo’s underperformance has further weakened the brand’s position. Sales of the model only reached two-thirds of the projected target. Despite this, the company aims to maintain a 30% market share, but not at the expense of profitability. According to data from "Automotive Industry Information," the public (Volkswagen) currently holds a 26.4% market share.
Biedemann also emphasized that even though the company plans to invest 6 billion euros ($7.4 billion) by 2007 to double its production capacity, there will be no overcapacity risk. “We want to keep a 30% market share, but if that’s not possible, we’d rather focus on profitability,†he said. Additionally, he suggested that the recent slowdown in China’s auto sales growth—down from 45% to around 15-20%—may be due to consumer demand for lower prices, not a slowing market cycle.
Source: International Finance News
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