Shanghai Volkswagen Retakes Sales Lead from
GM
Shanghai Volkswagen, which has suffered flagging sales
at the hands of GM, has retaken the sales lead for the
month of July, with 28,000 cars sold. This was a 34.6%
rise from June.
GM had sold 24,040 units in June, which had briefly made
it the best-seller in China. GM
had cut prices by 11%, starting a price war, and Volkswagen
matched the price cuts to protect its market share from
dipping.
Both Shanghai Volkswagen and Shanghai GM are joint venture
partners with SAIC,
China's leading auto maker.
Volkswagen
has had the earliest presence in China, but has to recover
from the launch of the Polo, a small expensive car. It
has turned out that Chinese car buyers are divided into
two major groups: the general buyer buys largely based
on price,
while the affluent buyer goes for status and brand cachet,
buying leading makes such as Mercedes Benz and BMW. For
the latter group, the rule is "If you've got money,
flaunt it!"
This year, this group has opted for the Hummer H2, made
by GM. The car sells for nearly US$100,000 in China, and
is the size of a small tank, with mileage which isn't
much better than a small tank.
For car marketers, this means that the market is still
relatively young and undeveloped, and as more models are
introduced into China, there is room for more market segmentation
and positioning for new models.
The Chinese government, in an effort to slow down spending
and growth, has tried to cut back on auto financing. This
creates a very interesting situation as the auto financing
arms are usually more profitable than auto manufacture
for many car makers. The results of the soft-landing policy
are mixed because many Chinese buy their cars with cash.
While the Chinese government claims that they have succeeded
in cutting back spending, often the Chinese man-in-the-street
feels that there is not much difference.
The effect has been much more pronounced with large-scale
projects, which have seen cutbacks in capital expenditure.
Most of the cutbacks are directed at highly visible projects.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
