Volkswagen AG reached one of its major goals in 2013, selling more cars than any foreign automaker in China. In capturing the title, it outsold General Motors for the first time in eight years in China.
Volkswagen’s two joint ventures sold more than 3.19 million units for the year, the government-backed China Association of Automobile Manufacturers reported. The victory was narrow as GM sold 3.16 million units as sales of new vehicle topped 20 million units overall for the first time. VW’s victory in China also served to offset the company’s disappointment in the U.S. where its sales dropped.
The duel between GM and VW is expected to resume this year as both companies are expecting more growth in 2014.
Meanwhile, the China Association of Automobile Manufacturers have cautioned that growth could be slower as the anti-pollution campaigns across China and austerity and higher lending costs spread from municipality to municipality. Nonetheless, the growth in China’s auto sales is still expected to surpass 10%, according to the association’s predictions.
Automakers sold 10 times more passenger cars in China than in India last year, reflecting the speed at which the world’s largest vehicle market is racing ahead of its global rivals, according to the Financial Times.
To combat air pollution, China’s State Council, or cabinet, released a national plan in September that called for a 15% to 25% reduction in particulate matter by 2017 in the three key manufacturing regions anchored by Beijing, Shanghai and Guangzhou.
Vehicle emissions now account for 20% of fine particulate matter in China. It’s that matter that poses the greatest health risks because it can penetrate deep into the lungs, according to the official Xinhua News Agency.
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The pressure to curb pollution poses a potential challenge for Western carmakers that are spending billions of dollars to expand production capacity in China. GM, Ford, VW, Mercedes-Benz, Fiat and Nissan are either building new plants or planning to build new or additional plants in China.
The rapid growth in China is also upsetting the established order in the car business by offering a lifeline to also-rans, such as Peugeot and Volvo and by putting traditional powerhouses, like Japan’s Toyota, on the defensive.
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Toyota, the global leader in auto sales, fell to No. 6 among foreign automakers in China, though Japanese carmakers rebounded from the backlash of 2012, when a territorial dispute over a group of uninhabited islands led to violent protests that prompted Chinese consumers to shun Japanese-branded cars.
On the other hand, Ford Motor Co., which got a late start in China, benefited from the popularity of its Focus car, helping the company post the biggest growth among major foreign automakers. China deliveries surged 49% to 935,813 units, outselling Toyota on annual basis for the first time.