VW seeks China chief as GM, Hyundai steps up rivalry

Volkswagen AG's new head of China will have a tough act to follow: current chief Winfried Vahland brought home a $1 billion profit for the German carmaker last year after reversing losses and a slumping market share.

Vahland, who has overseen the China division for five years, is leaving in the second half to return to the Czech Skoda unit and replace Reinhard Jung. Former Continental AG Chief Executive Officer Karl-Thomas Neumann, hired by VW last November, is a candidate to replace Vahland, a person familiar with the matter said earlier this month.

The task for Vahland's successor will be to claw onto his market share gains as Hyundai Motor Co. and General Motors Co. speed up the development of new cars for an increasingly finicky public. VW needs to update aging products as GM introduces 25 new or refreshed models in China by the end of next year, according to IHS Global Insight's Lin Huaibin.

"VW needs to get a better understanding of what the local Chinese customers want," said Lin, a Shanghai-based auto analyst at Global Insight. Local buyers are showing "greater demand for modern cars, fuel efficiency and safety provisions."

Volkswagen, the biggest overseas maker of passenger cars in China and the first to enter the market three decades ago, is relying on two "very old-fashioned" 1980s vehicles, the Santana and Jetta sedans, Lin said. The models together accounted for almost a third of VW's 1.4 million deliveries to Chinese customers last year, he said.

Chevrolet Volt

Detroit-based GM announced plans April 12 to add hybrids, plug-ins and electric vehicles, including the Chevrolet Volt plug-in car, within the next five years in China, which passed the U.S. as the No. 1 automobile market last year. Hyundai, South Korea's biggest carmaker, intends to build a new model at its third Chinese plant, it said last week in Beijing.

VW plans to invest more than 4 billion euros by 2012 on new models and plant expansions in China, its largest market. VW, which rolled out the Passat CC sedan at the Beijing Auto Show, plans seven new introductions in China this year, Vahland said in an interview in Beijing.

A Tiguan sports-utility vehicle introduced earlier this year has attracted more than 90,000 advanced orders, and VW expects a new Phaeton luxury sedan unveiled in Beijing last week to help double the model's deliveries this year to more than 3,000 cars, Vahland said.

"There's a seemingly endless lust for mobility in China and VW is right at the center of this astonishing development," Volkswagen CEO Martin Winterkorn said at the Beijing Auto Show. "China has become a second home market for VW."