Volkswagen benefitted as car demand in Europe accelerated at the fastest pace in five-and-a-half years, softening the blow from a slowdown in China, its biggest market. To achieve its goal set in 2007 to become the world’s largest automaker, Volkswagen will have to withstand the slump in demand brought about by China’s volatile stock market and competition from cheap SUV models by Chinese brands.
“Toyota versus Volkswagen is going to be a very close race,“ Koji Endo, an auto analyst at Advanced Research Japan, said. “These companies want to make the profitability side much more important than volume.“
A global auto industry that has expanded every year since 2009 faces a stalling market in China, collapsing demand in Russia and weakness in some South-east Asian and South American countries. In the US, industrywide deliveries increased just 4.4% during the first half of the year, putting the market on track for its smallest annual gain since the recovery began.
General Motors, the third-biggest automaker by global sales, said earlier this month that its worldwide deliveries fell 1.2% in the first half to 4.86 million vehicles.
“The extent of the recent softness exhibited by many markets was not anticipated at the beginning of the year by either the companies themselves or by the market,“ Clive Wiggins, a Tokyo-based analyst at BNP Paribas, wrote in a report on Monday . Japanese carmakers may cut sales forecasts and need cost reductions and currency gains to avoid having to reduce their outlook for earnings, he said.
China’s passenger vehicle sales fell for the first time in more than two years in June as economic growth slowed and a stock market rout dented consumer sentiment.Global automakers will manufacture fewer vehicles in China this year than they are able to because of slowing demand, a reversal after years of rushing to build new facto ries, Sanford C Bernstein analysts said in a report this month.
Toyota bucked the market trend with a 42% gain during the month and boosted sales during the first half by 10% to 512,800 vehicles.
Volkswagen’s deliveries during the first six months fell 3.9% to 1.74 million.
Christian Klingler, Volkswagen’s sales chief, said earlier this month the company was “not immune“ from market trends in China and that conditions in South America and Russia market “remain tense.“
In Europe, the longest stretch of economic growth for the 19 coun tries using the euro has put auto sales on more solid footing in ANIRBAN BORA countries where Volkswagen dominates.
The German carmaker boosted sales in its domestic market and in broader western Europe by more than 6%, helped by the VW Passat sedan and Porsche’s Macan com pact SUV . Toyota’s registrations in Europe climbed 5.7% during the period, according to the European Automobile Manufacturers’ Association.
In the US, Toyota outpaced the broader market by posting a 5.6% gain, driven by demand for its Lexus NX and Toyota RAV4 com pact SUVs. By comparison, the VW, Audi and Porsche brands com bined increased sales by 2.4%.
Both companies struggled in Japan during the first half, where demand has been weak since last year’s sales tax increase. Deliveries slumped 8.2% for the Toyota and Lexus brands and 13% for Daihatsu.
Sales in Japan plunged 17% for VW, putting the brand on track to fall behind Mercedes-Benz as the top-selling import for the first time in 16 years.
Source : Bloomberg, 2015, July