New models, price discounts lead Volkswagen to profit in China

VOLKSWAGEN AG, Europe's biggest car maker, returned to profit in China last year as it boosted car sales in its largest overseas market by 24 percent.

The auto maker sold 711,298 cars on the mainland and in Hong Kong in 2006, including a 39 percent gain at its Audi AG luxury car unit, the Wolfsburg, Germany-based company said in a statement yesterday.

Volkswagen had its first loss in more than 20 years in China in 2005, as it gave away market share to General Motors Corp and other auto makers, Bloomberg News reported. Last year, the company added new models specifically designed for the Chinese market and spurred sales with discounts.

"The new models and marketing strategy proved successful in reviving the company last year," said Li Chunbo, an analyst at Citic Securities Co in Beijing. "Volkswagen will probably maintain its market share and lead in China's passenger car market in the coming few years."

Volkswagen, which sells only passenger cars in China, added the Sagitar sedan in April followed by the Polo Jinqing and Jinqu compacts in June. The company plans to introduce as many as 14 new models in China by 2009.

"We have exceeded our internal sales targets for 2006 by far and have met the goal we set for ourselves of stabilizing our market share," Winfried Vahland, chief executive and president of Volkswagen Group China, said in the statement. "We also have achieved a positive financial result in 2006."

Spokesman Kai Grueber declined to provide an exact figure for the company's profit in China.

GM said on Monday that it boosted sales in China 32 percent to 876,747 vehicles, including light trucks and commercial vehicles. It expects to sell one million vehicles in China by next year at the latest, Kevin Wale, chairman of the Detroit-based auto maker's China unit, said earlier.

FAW-Volkswagen Automotive Co, which produces and sells the Jetta sedan, China's best-selling model, sold a record 350,000 vehicles last year. Sales of the Jetta reached 161,000 units in the first 11 months, according to the China Association of Automobile Manufacturers.

Shanghai Volkswagen Co sold 352,000 vehicles in 2006, the company said on its Website. Sales of the Passat Lingyu sedan, reached 96,300 units in the first 11 months.