Auto venture steps on the gas in China
By Yu Qiao (China Daily)
Updated: 2006-03-10 06:09

German carmaker Volkswagen's joint venture with First Automotive Works Corp (FAW) will take aggressive marketing and sales measures and launch new models to boost sales this year.

The venture, FAW VW, aims to increase its Volkswagen-brand sales by 10 per cent this year from 2005, said Weiming Soh, new sales chief of the venture.

The venture, which also produces Audi sedans, sold 221,000 Volkswagen-brand cars last year.

FAW VW has reshuffled its nine regional markets in China into five "strategic business units" or SBUs, Soh said.

Every SBU will be responsible for sales management, market promotion, after-sales services, financial controls and training support for the venture's dealerships, Soh said. FAW VW expects these five SBUs will contribute to 80 per cent of its total Volkswagen-brand sales.

"We will provide just-in-time delivery of cars to buyers, which means it will produce cars according to the number of orders from customers," he said. Soh said the move is expected to help the venture reduce its inventories.

Soh, also vice-president of Volkswagen China Group, took the helm of the joint venture's marketing and sales activities in January.

To lure customers, the venture on Wednesday announced to slash prices of the Jetta, Bora and Golf by 7 to 10 per cent.

The venture has also made a new pricing scheme, which bans dealers from adjusting its fixed retailing prices. Previously, FAW VW, as well as most of the other carmakers in China, offered guiding prices and gave dealers a certain range to charge.

"The new scheme will provide transparency to our customers and dispel their doubts on our prices," Soh said.

He said FAW VW plans to launch two to three new models this year, such as the Sagitar and the Future B6.

In the first two months of this year, FAW VW sold 33,411 Volkswagen-brand cars, more than 40 per cent from a year ago, he said.

"But we are not satisfied with our market share. The car market in China is growing faster (than the venture) thanks to very strong demand for mini cars," he said.

Total sales figures of made-in-China cars are not available now. In January, the sales rocketed by a staggering 72.6 per cent year-on-year to 418,900 units.

Soh did not reveal the joint venture's sales target for Audi cars this year.

(China Daily 03/10/2006 page10)