The real battle for world dominance will be in China where VW is firmly entrenched.

The fight for world dominance is in China where VW is entrenched.

Volkswagen Group Japan is canceling its agreement with Toyota Motor Corporation on car imports. As a result, Toyota will no longer distribute VW brand cars in Japan after 2010, as the two giant companies fight for the title of world’s largest autmaker.

Existing Volkswagen dealers under a Toyota distributorship, called DUO, will move to a new direct dealer contract with VWGJ.

Toyota said the shift to the new structure would be accomplished without any inconvenience to existing Volkswagen customers.

In 2008, of 45,522 Volkswagen cars sold in Japan, DUO dealers sold 21,774 units, thus contributing to making Volkswagen the largest import brand there, a title VW has held for nine consecutive years.

The Japanese Automobile Manufacturers Association (JAMA) predicts the market will be 4,798,400 vehicles in 2010, compared to about 4,611,500 this year as sales fell 9%, the sixth straight yearly decline.

VWGJ currently has 250 dealerships in Japan, making it the largest network for imported cars, which industrial Japanese policy formally and informally discourages.

In a statement, Toyota said the decision was prompted by VW AG, which has been reviewing its global sales structures since the economic crisis in the autumn of 2008. As part of its strategy to rationalize sales structures, Volkswagen wanted to move to direct contracts with all dealers in Japan without a distributor, which has now been agreed by TMC.

In July 1991, VWGJ, VW AG and TMC signed a distributor agreement on Volkswagen cars in Japan. TMC started DUO operations in 1992, and it has grown to 134 dealerships run by 88 companies.

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