VW July China sales up 68% y/y to 128,000 cars

Volkswagen sold a record number of cars in China last month as the German carmaker continued to benefit from government stimulus packages around the world.

The group, which has launched a range of VW models specifically for the Chinese market, sold 128,000 cars there in July, representing almost a quarter of its total global sales and up 68% on last year.

China has cut sales tax and offered subsidies to boost vehicle sales, part of a £360bn stimulus package announced last year. Analysts estimate that China will overtake the US to become the world's largest car market by the end of the year.

In Germany too, Volkswagen recorded a 27% increase in sales as the government's scrappage scheme pulled customers into showrooms. In the UK, where a less generous scrappage scheme is in place, sales rose slightly. Overall, total sales, which also include the Seat, Audi and Skoda brands, were up by 7% last month.

But Detlef Wittig, executive vice president, group sales and marketing, remained cautious. "The recession is not over yet, it has perhaps bottomed out, but we see no signs yet of a sustained recovery on world markets," he said. "We are viewing further developments with caution."

Paul Newton, automotive analyst at IHS Global Insight, said carmakers were worried about the effects of the double dip recession, which economists are predicting later this year. Stimulus measures in the UK, Germany and China are due to terminate by the end of the year.