China: 18 Million Cars This Year. But What About Next?

Bertel Schmitt
by Bertel Schmitt

“The next 24 months will be tough for us,” said Soh Weiming, Volkswagen’s company’s executive president for China, to Bloomberg. Is Volkswagen running scared in China? Will the bubble finally burst? Soh Weiming is worried.

He is worried Volkswagen can’t build enough cars to meet demand. “VW’s biggest challenge to growing sales is limited capacity in China,” said Soh. Volkswagen is bullish on China. They are working on doubling their production capacity in China to three million vehicles by 2013/14 with two new factories.

Until that capacity comes on-stream, Soh Weiming has to make do with what he has, and cautiously predicts Volkswagen’s sales to rise 10 to 15 percent in 2011.

That “10 to 15 percent growth in 2011” is the number du jour in China.

GM China’s President Kevin Wale predicted last month that GM’s China sales will rise by as much as 15 percent next year. Toyota said today it plans to raise China sales by 13 percent to 900,000 in 2011.

The China Association of Automobile Manufacturers (CAAM) estimates deliveries will be 18 million in 2010.

15 percent on top of 2010 would be 20.7 million in 2011. Analysts from Booz & Co. to Nomura agree and predict that the Chinese market will be above 20 million this coming year.

Managers usually only set goals they are certain to meet and exceed. At around the same time last year, managers maintained a similarly cautious outlook for China and predicted 15 percent growth in 2010. Oblivious to these predictions, the market will haven risen more than 30 percent when this year is over.

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