Volkswagen China Goes South?

by Bertel Schmitt

Published: November 9th, 2009

At the upcoming 2009 Guangzhou auto show, Volkswagen China is expected to announce that they will build a plant in southern China, Gasgoo writes, citing reports in sohu.com. Not much else is revealed, not even which of their two Chinese joint venture partners will get the new plant.

Volkswagen cooperates with two companies in China: FAW, based in Changchun in the North, and SAIC, based in Shanghai in East China. Both are bitter rivals.

FAW-VW makes and sells through its own dealership network the VW Jetta (based on the Jetta MK2), the VW NewBora (based on the Jetta MK4),, the VW Sagitar (based on the Jetta MK5), the VW Golf (based on the current MK6 model), and the VW Magotan (based on the current Passat MK6 platform.) FAW also has a joint venture with Volkswagen to build the Audi range.

SVW makes and sells through its own dealership network the VW Santana (based on the Passat/Santana MK2), the VW Santana 3000 (a homegrown design), the VW Passat (based on the MK5 platform), the VW Polo (Mk5 based), the VW Touran MPV, and the VW Gol (based on the Brazilian-bred supermini.)

“To build a plant in South China has been determined. Volkswagen plans to announce its plans at Guangzhou auto show by Fan Ande, CEO of Volkswagen Group China,” a mysterious source in Volkswagen said according to Sohu. That source doesn’t know the name of its boss. “Fan Ande” appears to be a chinafied version of Winfried Vahland, who’s the real boss at Volkswagen Group China.

Geographic weakness has always been the chink in Volkswagen’s otherwise shining Chinese armor. SVW cars are strong in the East. A visitor to Shanghai may get the impression that VW’s lineup consists only of Santanas, just by looking at the taxi fleet. FAW cars are strong in the North. The Jetta is as ubiquitous in Beijing and points north as the Beetle was in post-war Germany. In China’s populous South, VW is weak with a market share of only 5 percent. China’s South is dominated by cars with Japanese roots. If VW wants to unseat Toyota by 2018 (as proscribed in VW’s “Strategy 2018”) then they need to flush out the Japanese from the Southern Region, where 35 percent of China’s booming new car market are sold.

#BertelSchmitt #China #VW

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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Mpresley on Nov 09, 2009
In China’s populous South, VW is weak with a market share of only 5 percent. China’s South is dominated by cars with Japanese roots. If VW wants to unseat Toyota by 2018 (as proscribed in VW’s “Strategy 2018”) then they need to flush out the Japanese from the Southern Region, where 35 percent of China’s booming new car market are sold. Anecdotes are often unreliable, but I wonder about the 5%. The last two years I've visited the Shenzhen/Guangzhou area (across the bay from Hong Kong) I saw many Mk 5 Passa-tuhs (as they are pronounced) and more Jedi (not the Sagitar--where I only saw two) than you can count--in three or four iterations. Also, a lot of Audi-mobiles abound. In SZ, some of these may have been HK cars, though. You can usually tell because of the plates and the right hand driver position. On the other hand, Japanese cars (mostly Toyoti) are ubiquitous. This is strange given the general dislike for Japanese, but all that is forgotten when the Chinese businessman sits behind the wheel of his Toyota Crown. But in SZ, you can find almost anything--even Citroens, and who buys them, I wonder?

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Rmlindsay on Nov 09, 2009

There is definitely animosity towards Japanese brands in China. A couple of my Chinese colleagues have stated explicitly that they don't buy Japanese products (not Sony, etc.) Seems more pronounced in those from the Shanghai region than those from Shenzhen/Guangzhou. Could be 'cause the raping and pillaging by the Japanese army was more horrific in the East. German vehicles are popular and the Koreans are rising fast. Buick has a surprisingly high market position. As it was explained to me, the proliferation of Audi A6s in Shenzhen is due to it first in the market and being on the approved list for high ranking gov't officials. The BMWs and Benzes have made the list more recently, but have a rep for being more expensive and exclusive. The Audi is the nicest car on the list that doesn't make it look like you are taking advantage of your position.

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