VW reports 14% y/y sales growth in China during February, plans new EV plant
Volkswagen (VW) Group has reported 14% year-on-year (y/y) sales growth in China to 253,200 units in February, reports the Automotive News. Out of this total for the group, VW-brand sales in the country grew 11% y/y to 189,100 units, Skoda sales were up 31% y/y to 19,600 units, and Audi sales were up 22% y/y to 39,364 units. The year-to-date sales in February of VW Group were up 15% y/y to 651,800 units in China. In a separate development, VW has announced plans to set up a new plant to produce its I.D.-brand electric vehicles (EVs) with joint-venture partner Shanghai Automotive Industry Corp group. The new plant is due to begin production by 2020 and the first two products built at the plant will be a compact crossover and a subcompact crossover, reports online news source Auto Market online, citing VW's CEO for operations in China, Joachim Heisman.
Significance: VW's sales growth in February is due to strong demand for crossovers and sport utility vehicles (SUVs) in the country. During 2017, SUV sales in China grew by 13.1% y/y to 10.7 million units, according to IHS Markit's light-vehicle sales data. This is further expected to grow by 4.4% y/y to 11.2 million units in 2018. According to our data, the combined SUV sales of VW, Audi, and Skoda brands in the country went up 22.7% y/y in February to around 41,000 units. China is a significant market for VW Group and in order to maintain its market share and to take advantage of the tax subsidy on local production, Audi recently announced plans to launch 10 new SUVs in China by 2023. Out of these 10 models, seven will be produced locally in China. Moreover, four out of these 10 models will be EVs.
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