Daily Management Review

Volkswagen sales in China collapse in January by 11%


German automaker Volkswagen AG announced a 11% decline in sales in China in January amid an outbreak of pneumonia caused by the Covid-19 coronavirus.

Global car manufacturers have major operations in China, and analysts warn that the actual closure of a number of cities in China to limit the spread of coronavirus will seriously affect both sales and profits of the sector representatives in the first quarter of 2020.

Coronavirus has become a new problem for car manufacturers, who are already in a difficult situation, given the weakening global demand, the high cost of developing electric vehicles, as well as stricter emission requirements, especially in Europe.

The closure of Chinese enterprises has brought problems to those manufacturers in various industries who purchase at least part of the components in China.

Volkswagen is the largest foreign automaker in China, where it sells cars of the brands Volkswagen itself, as well as Audi, Porsche and Skoda. Last month, the automaker sold 343.4 thousand cars in China, compared with 387.3 thousand cars a year earlier.

In December - even before Chinese enterprises began to close due to coronavirus, Volkswagen sales in this country grew by 17%. In 2019, Volkswagen sold 4.2 million cars in China, up 0.6% from a year earlier.

Volkswagen operates approximately 20 enterprises in China, which produce more than 4 million cars a year. The closure of enterprises means that the company will produce several hundred thousand less cars in the first quarter of this year, and at the moment it is not clear when the plants will be able to return to normal operation.

Volkswagen global sales in January fell by 5.2%, to 836.8 thousand cars. Car sales in North America grew by about 5%.

Volkswagen continues to struggle with the consequences of the “diesel” scandal that erupted in 2015. The company said on Friday that negotiations to settle the first major class action lawsuit filed by consumers in Germany had failed.

source: bloomberg.com