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For VW China, If At First You Don’t Succeed, Wait A Few Years

When Volkswagen announced in November that it planned to institute a new sales channel in China with SAIC Motor Corp., their dealer body protested by halting new-car orders. The protest has had a major impact and VW has postponed its plans.

In what could be a case of it at first you don’t succeed, try something else, Volkswagen’s China sales effort seems to have run aground briefly on an unexpected shoal. That shoal has the name SAIC. For the last couple of years, China has been one of the Volkswagen Group’s best markets. The Asian country could be counted on for sales routinely in the six-figure range.

That is all well and good, but, what was better for the automaker was the fact that many of its sales were in its pricier lines, Porsche and Audi. Indeed, continued growth in the Porsche and Audi lines in China, where many well-heeled citizens preferred the VW Group’s pricier offerings would seem to have been in the automaker’s favor. So, why, you have to wonder, did someone pull out a new sales game plan that immediately crushed the automaker’s most promising sales pipelines?

VW’s China Dealer Network Balked At New Sales Channel

Last month, the Volkswagen Group – more specifically Audi – had hoped to open a new sales channel, using the VW-China joint effort, SAIC Motor Corp., apparently believing established dealers wouldn’t be bothered by the new sales channel. That was a mistake in judgment.

Instead of seeing the continuing, steady sales growth that they had experienced, Audi watched its sales tank as their dealer body protested the new sales effort. Plainly, the new sales effort with SAIC had wreaked havoc on established lines.

What type of havoc did the new plan bring? For the month of March, Audi sales were down 1.1 percent from a year earlier with a total of 324,500 vehicles delivered on a month-to-month basis. Instead of continued success, Audi sales came to a screeching halt as Audi worked to fix its dispute with its angry dealers. For the month, Audi sales sank about 19 percent to 41,371 vehicles. The automaker ran into a wall as dealers stopped ordering vehicles following November’s announcement of the SAIC Motor sales channel.

Volkswagen Halts Plans To Institute New Sales Network

Dealer pressure took this round as late last month the automaker said it would postpone plans for the new sales network until China sales topped 900,000 vehicles. That will take a bit like last year the VW Group posted total sales of 591,554 vehicles in China.

Meanwhile, Volkswagen brand sales helped to cut the sales hit as sales rose 3.6 percent in March to 254,300 vehicles. Skoda sales dropped 15 percent, though, to 21,800.

In an ironic twist, the world number one automaker VW faced GM claiming bragging rights in China as the top foreign brand. General Motors claimed it was China’s top foreign automaker as its sales rose 16 percent to 345,448 vehicles.

Source: Automotive News China