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Volkswagen Sales in China Fall for the First Time Since 2005, Group Posts Flat Global Results

The stock market in China has nothing to do with a decline in car demand that's being witnessed by all the major automakers. However, they combine into a panic-inducing phenomenon that officials only whisper about. Volkswagen showed a drop in demand over the first half of the year of nearly 4% (3.9% for the Group, 3% for VW brand) and is now facing the so-called "New China" reality.
Volkswagen Sales in China Fall for the First Time Since 2005, Group Posts Flat Global Results 1 photo
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There hasn't been a decline in Volkswagen sales over there since 2005. However, the whole industry is struggling. Overall industry sales are only up 5.5% compared to 10% for the same period of last year. Other companies are struggling too, such as GM, which grew only 3%. Both BMW and Audi are now trying to help local dealerships by offering them financial aid, $190 million in the case of the four-ringed brand.

Here's what Group Board Member for Sales Christian Klingler had to say: “Group’s overall development in the first half year was satisfactory. Volkswagen Passenger Cars brand was not immune to current trends in China.”

But we can't imagine they are happy with any of this. In total 5.04 million cars were sold by the many brands under VW's umbrella in the period from January to June 2014. That's down just 0.5%, but the pace of decline accelerated in June, when sales fell 4.3%.

It's not all bad news, as VW's slowing global sales were countered by Audi (902,400 sales, +3.8%), Porsche (up 29.8 percent to 114,000), Skoda (544,300 sales, +4.2%) and SEAT (223,000 sales, +8.2%).

The consensus seems to be that Volkswagen is being hurt by a bad product mix and the product cycle. The aging Passat and Phaeton sedan models sold in China are finding it increasingly hard to compete.

Domestic automakers are looking much better with a 17% increase so far this year. Firms like BYD, Geely, Brilliance and Great Wall all launched new models this year, including their own SUVs, made with Chinese customers in mind.
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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