Both Volkswagen and Great Wall Haval have focused their sights on the profitable economy class segment in China, priced between 90,000 RMB and 120,000 RMB. Competition between the two manufacturers was especially fierce in October of this year, with VW adding revisions of the Bora, Sagitar, C-Trek and Touran L to its catalogue, while Great Wall Haval added the H7L Hongbiao, H2 and H6 Sport Edition, among others. VW’s share in the 90,000 RMB-120,000 RMB market slipped from 19.85% in September to 16.53% in October, while Great Wall Haval’s grew 6.91% to 9.44% over the same period of time.
The 90,000 RMB to 120,000 RMB segment is an especially important one in the Chinese passenger automobile market, with both domestic own brand manufacturers and Sino-foreign joint ventures looking to capture as big of a slice of the pie as possible. Most models in this segment are compact sedans and compact SUVs. Consumers gravitate to VW for its compact sedans while Great Wall Haval handily dominates the SUV side of things. Therefore, it’s unavoidable that the two brands would compete with each other.
VW’s decline in market share in October show that Great Wall Haval’s strategy has been successful, with the brand managing to overtake Toyota to rank second in the segment. If VW loses just a bit more market share, it may mean a major decrease in sales for its models under 120,000 RMB as more and more consumers flock to Great Wall Haval.
Earlier this year, Great Wall CEO Wei Jianjun announced his intention to see Great Wall Haval sales reach two million units by 2020. This almost seems like a direct challenge to VW, since they are the only major rival the manufacturer has in the all-important 90,000 RMB-120,000 RMB segment. Therefore it will be of great importance to keep an eye on changes in this market over the upcoming months.
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