Martin Winterkorn, CEO of Volkswagen AG has said that he expects China to overtake VW's domestic Germany home market as its largest market by the end of this year. In March, sales of VW Group branded cars (Volkswagen, Audi, Skoda) in China broke a new sales record by selling 112,466 cars, breaking the psychological 100,000 cars a month barrier.
VW's rapid rise in China car sales has a lot to do with the overall rise in China car sales, which for the third time in a row since January 2009, has exceeded vehicle sales in United States of America. The spurt in overall Chinese car sales comes after an economic stimulus package unveiled by the Chinese government early this year to boost consumer spending and also to encourage adoption of new and cleaner smaller capacity cars. The Chinese government has halved purchase taxes on cars with engine capacities less or equal to 1.6 liters. A 5-billion yuan subsidy package is also in the pipeline to boost vehicle sales in rural regions.
However, China's domestic car market boom seems more like an oasis in the desert of plunging car sales. China's car exports in Q1 2009 fell 62% from the corresponding quarter last year.
VW vehicles in China are made by its two joint venture partners; Shanghai Volkswagen and FAW-Volkswagen.
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