Volkswagen considers low-cost SUVs, minivans for China
Volkswagen is exploring the possibility of developing budget SUVs and minivans in China to keep up with shifts in the market, said Jochem Heizman, chief of VW China.
Volkswagen will not outpace the industry's growth rate this year in China, after being caught out by a surge in demand for budget SUVs and minivans, he said.
"The biggest increase of volume, biggest development, was in the budget SUV segment, in the MPV segment, low-priced budget MPV segment, which we're not in," Heizmann told reporters in Shanghai on Sunday ahead of the city's auto show.
Heizmann said the VW has "concrete projects" to address the issue. "We are talking about a product family there. We are not taking about one or two cars," he said.
VW said the specific new projects were currently at an exploratory stage and had not yet been confirmed.
Sales of SUVs in China soared more than a third last year to 3.82 million units, and have more than doubled since 2012, rapidly outpacing growth in other segments, according to the China Passenger Car Association (CPCA).
About 5.2 million SUVs will flood the China market this year, up 27 percent compared to last year; according to financial services company Nomura. Sedans, by contrast, are expected to rise just 1 percent to 12.5 million.
China is critical to VW as the carmaker's U.S. sales are faltering and European vehicle demand is still recovering from a slump. VW was the top-selling foreign automaker in China last year, but deliveries of its namesake-brand vehicles declined 0.6 percent in the first quarter, according to the company.
By contrast, overall passenger-vehicle sales rose 9 percent in the same period, according to the China Association of Automobile Manufacturers.
Chinese-brand SUV sales more than doubled in the first quarter to overtake foreign nameplates in the segment this year, accounting for 56 percent of all deliveries, according to the association.
Production constraints
VW will not rule out buying existing plants in China for its expansion, Heizmann said on Sunday. He had said in November that the automaker's growth in China slowed as the company faced capacity constraints.
The carmaker plans to increase production capacity in China to 5 million vehicles by 2019 versus 3.5 million in 2014, said Larissa Braun, a Beijing-based Volkswagen spokeswoman. The company has 28 plants in China and will open two more this year, she said.
Heizmann said Volkswagen needed not only to build new plants and boost its manufacturing capability in China, but also become more responsive to the market.
"We don't have the flexibility to integrate new models without directly losing capacity," he said. "We don't have the flexibility to react to seasonal effects. We don't have the flexibility to deal with life cycles of cars."
"The biggest increase of volume, biggest development, was in the budget SUV segment, in the MPV segment, low-priced budget MPV segment, which we're not in," Heizmann told reporters in Shanghai on Sunday ahead of the city's auto show.
Heizmann said the VW has "concrete projects" to address the issue. "We are talking about a product family there. We are not taking about one or two cars," he said.
VW said the specific new projects were currently at an exploratory stage and had not yet been confirmed.
Sales of SUVs in China soared more than a third last year to 3.82 million units, and have more than doubled since 2012, rapidly outpacing growth in other segments, according to the China Passenger Car Association (CPCA).
About 5.2 million SUVs will flood the China market this year, up 27 percent compared to last year; according to financial services company Nomura. Sedans, by contrast, are expected to rise just 1 percent to 12.5 million.
China is critical to VW as the carmaker's U.S. sales are faltering and European vehicle demand is still recovering from a slump. VW was the top-selling foreign automaker in China last year, but deliveries of its namesake-brand vehicles declined 0.6 percent in the first quarter, according to the company.
By contrast, overall passenger-vehicle sales rose 9 percent in the same period, according to the China Association of Automobile Manufacturers.
Chinese-brand SUV sales more than doubled in the first quarter to overtake foreign nameplates in the segment this year, accounting for 56 percent of all deliveries, according to the association.
Production constraints
VW will not rule out buying existing plants in China for its expansion, Heizmann said on Sunday. He had said in November that the automaker's growth in China slowed as the company faced capacity constraints.
The carmaker plans to increase production capacity in China to 5 million vehicles by 2019 versus 3.5 million in 2014, said Larissa Braun, a Beijing-based Volkswagen spokeswoman. The company has 28 plants in China and will open two more this year, she said.
Heizmann said Volkswagen needed not only to build new plants and boost its manufacturing capability in China, but also become more responsive to the market.
"We don't have the flexibility to integrate new models without directly losing capacity," he said. "We don't have the flexibility to react to seasonal effects. We don't have the flexibility to deal with life cycles of cars."
