VW stays course on SUV strategy

Volkswagen AG's namesake brand will not alter its nascent SUV strategy tailored for the Chinese market, according to a senior executive, although the segment has shown signs of losing steam in the past months.

The growth rate in SUV sales was overtaken by sedans in May, the first time in years. Its sales then dipped 0.2 percent year-on-year in June, followed by an 8.2 percent slump in July, statistics from the China Association of Automobile Manufacturers showed.

"But if you look into details, you will figure out it is not a general trend. We see brands and models gaining substantial sales year-on-year while other brands and models are declining," said Stephan Woellenstein, CEO of Volkswagen Brand China, last week in Beijing.

Woellenstein said SUVs and sedans each accounted for around 45 percent of passenger vehicle sales in China over the past two years, and as Volkswagen has been traditionally strong in its sedan offerings, it is time to build SUVs as a second pillar in its portfolio.

"So there is no reason for us to adjust our strategy to become a true SUV brand in China," he said, adding that he expects a balanced Volkswagen lineup of sedans and SUVs in the country by around 2021.

Volkswagen has been the best-selling foreign car brand in China for decades, with 1.48 million vehicles delivered in the first half of this year, up 6.3 percent year-on-year.

According to the company, four SUV models are expected to enter the market this year, with FAW-Volkswagen's T-Roc launched last month being the first.

Its SUV models will rise to at least 12 by 2020 from the current four, and Woellenstein expects Volkswagen's SUV sales in China to be at full steam by 2022.

Yet he admitted that competition will be fierce, as other foreign carmakers are revving up their SUV choices and local Chinese carmakers are catching up with regards to brand recognition.

"Some Chinese brands are becoming equal choices for many Chinese customers, and they no longer differentiate them from international ones. They are competent competitors and we regard them as such."

Volkswagen is also ready to charge into the booming new energy vehicle market in China.

The country is the largest market for such vehicles and a million are expected to be sold this year, according to the China Association of Automobile Manufacturers.

Woellenstein said the company will offer 10 new energy models before 2020, the year it will introduce into China the MEB platform specially developed for electric cars, and add at least another 10 into its portfolio.

Volkswagen is also planning to build charging poles across the country, saying that convenient access to charging facilities will alleviate potential customers' mileage anxiety when considering electric cars.

Last month, the carmaker announced that it will establish two joint ventures with its long-time partner FAW Group Corp, which will focus on offering public and private charging infrastructure and charging-related services, as well as intelligent and connected vehicle services.

There were 274,777 public charging poles across the country as of the end of July, of which 3,026 were built in that month, and 498,569 private ones, according to the China Electric Car Charging Technology and Industry Alliance.