VW forecasts 'difficult' 2009 China car market

Nov. 18 (Bloomberg) -- Volkswagen AG, the biggest overseas carmaker in China, expects a "difficult" period in the country in 2009 as a slowing economy and rising job concerns damp demand in the world's second-largest auto market.

"The first half of next year, especially the first quarter will be difficult," Winfried Vahland, Volkswagen's China head, said in an interview last night in Guangzhou. "What we have to do now is to help customers regain confidence in investing in cars."

Volkswagen's sales in China, its biggest overseas market, fell 4.2 percent in the third quarter as a cooling economy and traffic restrictions put in place for the Beijing Olympics deterred customers from buying cars. Slower China sales may hurt the German automaker, General Motors Corp. and Toyota Motor Corp., which are counting on emerging markets to offset slumping demand in the U.S., Japan and Europe.

"We are planning for growth, but if it doesn't come we will be prepared as well," Vahland said. He declined to give a sales forecast for next year, saying it was "too early to judge."

Honda Motor Co. expects the China market to expand 5 percent next year, it said last week. Industrywide car sales rose 11 percent in the first nine months of this year and 22 percent for the whole of 2007.

To revive sales, Volkswagen plans to add more than four new models next year, Vahland said, without elaboration.

The automaker will also boost its production capacity in China as its FAW-Volkswagen Automotive Co. venture has signed an agreement to buy a plant in the western city of Chengdu from China FAW Group Corp., he added. The automaker is yet decide which models will be built at the factory, he said. He didn't say how much the plant will cost.

Volkswagen, which also makes cars in China with SAIC Motor Corp., will have invested a total of 7 billion euros ($8.8 billion) in the country by end of this year, it said in August. Its sales in the country rose 13 percent in the first nine months on demand for new models including the Lavida.