VW expects ‘substantial growth’ in China as chip shortage subsides

Volkswagen expects “substantial growth” in China this year, the German auto giant’s head of operations in the country said on Wednesday.

“There are good reasons that the VW Group can do better than the whole market,” Stephan Woellenstein said in Beijing.

“We see positive momentum,” he added.

Nearly one in five new cars sold in China today comes from the Volkswagen Group.

However, Woellenstein noted that recent bottlenecks in the production of semiconductors had impacted the carmaker.

The vice president of Volkswagen in China, Rainer Seidl, said the country’s automobile market – the world’s largest – is expected to grow this year at a rate similar to that of its economy, which is currently projected for growth of more than 8 per cent.

Due to the fallout of the pandemic, VW’s sales in China slumped by 9.1 per cent last year, while the Chinese economy managed to post growth of 2.3 per cent.

Thanks to strict measures, China has largely brought the novel coronavirus under control since the summer and is now only recording limited local outbreaks. Life and economic activity have returned to normal.

The car market also picked up again significantly towards the end of last year.

“I firmly believe that China has really not only overcome Covid-19, but even more so the short economic [downturn] which started alongside the US and China trade conflict in 2018,” Woellenstein said.

However, the executive lamented a “substantial lack of electronic components” needed for VW cars.

Shortages in semiconductor components have led to knock-on effects in the supply chain. As a result, Volkswagen produced 50,000 cars fewer than usual in December.

Woellenstein expects the issues to continue in the first quarter and be overcome in the second.

“We are working day and night,” he said.

Of Volkswagen’s 25 new models this year, 13 are electric-powered.

While the car market has contracted on a whole, demand for e-cars and hyprid plug-in vehicles have been a glimmer of hope for automakers.

Sales of such cars increased by 7.4 per cent in China last year to 1.15 million units.

Source: GNA