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VW, General Motors Race for 2013 China Crown

Shanghai — Volkswagen will vie with General Motors for the sales crown among foreign automakers in China next year, gaining share as Japanese carmakers led by Toyota struggle to recover amid a territorial dispute.

VW, whose luxury Audi sedans are popular with Chinese bureaucrats, hasn’t held the lead in the country since 2004 and will probably sell 2.7 million vehicles in the country next year to GM’s 2.65 million, helped by eight new or revamped models including the Santana, Golf, Skoda Octavia and Audi Q3, according to industry researcher JSC Automotive Consulting. GM’s new offerings include the Cadillac XTS and three Opel models.

Passenger-vehicle sales in China will probably accelerate and gain as much as 10 percent next year, as a rebound in economic growth gathers strength, according to eight analysts surveyed by Bloomberg News.

Chinese leaders assuming power in a once-a-decade handover to be completed in March may introduce economic stimulus to increase domestic demand, Autoforesight Shanghai Co., LMC Automotive and Synergistics Ltd. forecast.

“When the economy stabilizes, Chinese consumers will have more confidence to buy cars,” said Lin Huaibin, a Shanghai- based analyst at IHS Automotive. “A lot of indicators have shown economic improvement since September.”

Foreign automakers are stepping up their investments in China, counting on the world’s largest pool of first-time car buyers to help offset declining sales in Europe. Total vehicle sales may surpass 19 million units this year, according to the China Association of Automobile Manufacturers on Dec. 10.

Globally, Toyota is poised to take back the title of world’s biggest automaker for 2012, as VW fights GM for second place in the final week of the year. Toyota said Wednesday its vehicle sales may rise 2 percent next year to reach a record 9.91 million vehicles, spurred by overseas demand.

In China, SUVs will remain the fastest-growing segment as it is “under-penetrated” and caters to the preference of Chinese consumers for roomier vehicles, while smaller cities will become more important for sales, said Steve Man, a Hong Kong-based analyst at Nomura Holdings.

The new leadership, helmed by Communist Party chief Xi Jinping, must decide the pace of market-driven change to boost consumer demand and balance the role of exports and investment.

China said it will seek a higher “quality and efficiency” of growth next year, and target “sustained and healthy development,” the state-run Xinhua News Agency reported Dec. 16 after a meeting of senior leaders in Beijing.

“The new government probably doesn’t want to start its tenure with a weak economy, so in China that usually means more investment spending,” said Bill Russo, president of Synergistics Limited. “The commercial-vehicle segment could be a beneficiary of any economic stimulus as businesses replace products like trucks for construction projects.”

Sales of commercial vehicles, which include buses and trucks, are down 6.8 percent in the first 11 months of this year, compared with a 7.1 percent gain in passenger vehicles, according to auto association data.

The pace of sales may slow in China if more cities implement or tighten measures to control vehicle populations to curb pollution and traffic congestion.

By 2020, another 20 Chinese cities may exceed the car- density threshold of 250 vehicles per kilometer of road, according to McKinsey & Co., which may prompt officials to impose similar restrictions to those in Beijing, Guangzhou and Shanghai.

For Wolfsburg, Germany-based VW, a revamped Santana sedan and expansion of its Skoda brand will help the automaker push into the less-developed Chinese cities, which China Executive Vice President Soh Weiming said last month was its “bread and butter.”

GM could fend off VW with new models coming up next year, such as the Buick Lacrosse and Regal, according to IHS.

“We don’t get too hung up on trying to, in a single year, be too concerned about number one position,” Bob Socia, GM China president, said in a Dec. 18 interview in Shanghai. “But make no bones about it, we’re here to win.”

GM has the capabilities in manufacturing, dealership and product to compete with the “best of them,” he said. The automaker plans to open 400 more showrooms across its brands next year in China, bringing its total to about 4,200 in the world’s largest vehicle market.