The Sunday Mail
China should be one place where Volkswagen CEO Matthias Mueller can enjoy a brief respite from the company’s rigged emissions scandal: The country is the German automaker’s biggest market, but there are only about 1,950 VW diesel imports in the entire country.
Mueller is one of several chief executive officers traveling to Beijing with German Chancellor Angela Merkel on a visit that began Thursday.
The company’s sales of diesel vehicles in China are “virtually nil,” Bloomberg Intelligence analyst Steve Man said, since diesel fuel in China “is just too dirty and the cars don’t run very well.”
That doesn’t mean VW is in the clear there: The country’s environmental protection ministry announced October 12 it was investigating VW’s vehicles. The company, which has joint ventures in China with FAW Group Corp. and SAIC Motor Corp., also is suffering from a series of recalls over the past two and a half years that have hammered its image.
The most recent setback came when China’s top quality watchdog announced a recall of 5,906 VW-owned luxury brand Bentley sedans with battery defects that could lead to overheating.
The bad publicity may be leading consumers to look at other brands. VW is still the market leader, with its Volkswagen, Audi and Skoda brands enjoying a combined 17 percent share for the first nine months of 2015, according to data compiled by Bloomberg, but that’s down from 19 percent a year earlier.
Sales of cars with the VW brand fell 8,5 percent, even as the overall market grew about 2,5 percent.
Especially damaging has been fallout from recalls affecting the flagship Volkswagen brand.
Last year the company recalled almost 600,000 VW vehicles in China after customer complaints, but customers unhappy with the proposed fix still protested in front of VW dealerships in major cities including Shanghai and Shenzhen.
In March 2013, the German automaker recalled more than 384,000 cars with defective gearboxes after a broadcast by state-owned China Central Television provided a national platform for customers to air complaints about the company’s cars.
The Chinese media is keeping up the pressure. China Daily, the official English-language newspaper, published a list Wednesday of the 10 worst cars in China, including three from Volkswagen, the most of any auto brand. According to the newspaper, auto website 315che.com compiled the list of the “Top 10 lemons” that received the most complaints. No. 1 was the VW Sagitar, with China Daily citing problems with its rear axel and “jerking start”.
Volkswagen did not immediately respond to several e-mails seeking comment.
SUV Envy
VW also is suffering because it doesn’t have enough models for the one part of the Chinese market still enjoying hot growth.
Sport utility vehicles accounted for 22 percent of the overall market in 2014 and 29 percent so far this year, according to Yale Zhang, managing director of Automotive Foresight (Shanghai).
During the first nine months of 2015, sales of local and foreign branded SUVs grew 46 percent.
Unfortunately for VW, the company isn’t positioned to take advantage of that demand.
While European, Asian and American rivals typically offer three to five SUV models in China, there’s just one under the mass-market VW brand.
The company’s Audi and Skoda marques have SUVs, too, but Chinese want low-priced SUVs and that’s a segment “we’re not in,” VW China chief Jochem Heizmann told reporters April 19.
“We’re working hard as well in these segments,” Heizmann said.
Don’t expect VW to close that gap soon.
The SUV segment “will continue booming” next year, Zhang of Automotive Foresight said, and VW “will suffer further.”— Bloomberg
