Volkswagen Says Car Market Won't Recover Before 2013

(chinatrucks.com, Oct. 10, 2009)Volkswagen AG, Europe's biggest carmaker, predicts the worldwide automotive market won't match pre-recession levels until 2013 at the earliest, Chief Executive Officer Martin Winterkorn said.

Industry sales in 2009 may decline for a second consecutive year to 49 million vehicles, down 17 percent from the pre-crisis peak of 2007, and a recovery next year isn't guaranteed, Winterkorn said today at a conference in Nuertingen, Germany.

"It's clear that 2010 will become a very difficult year,"Winterkorn said. "There are growing signs that the worst of the crisis may now be behind us, but it will take time for the markets to recover."

Worldwide car and light-truck sales amounted to about 59.2 million vehicles in 2007, according to figures from consultant IHS Global Insight. The German market, which is Europe's biggest with 3.09 million vehicles sold in 2008, may shrink to as low as 2.7 million units in 2010 after state incentives expire, Joachim Schmidt, head of sales at Daimler AG's Mercedes-Benz Cars brand, said today in an interview at the Nuertingen conference.

Wolfsburg, Germany-based Volkswagen scaled back a forecast decline for its 2009 vehicle sales by half in August after economic-stimulus programs in the company's home country and China, its two largest markets, boosted demand. Winterkorn today reiterated a goal of beating Toyota Motor Corp., the world's biggest automaker, in deliveries and profit margins by 2018.

Long-Term Outlook

Emerging economies such as China and India will be the source of any sales growth in the future, Winterkorn said. The long-term industry outlook is for global sales to exceed 70 million vehicles, with Germany stabilizing at about 3.3 million cars, he said, without specifying a timeframe.

"The striving for mobility across emerging economies is enormous,"Winterkorn said.

An estimated 300 million people in China are waiting to buy their first car, while the proportion of vehicles per resident in India is 11 cars per 1,000 people compared with 500 per 1,000 in Germany, the CEO said. "Those figures reflect the huge potential across developing markets,"he said.

China will overtake the U.S. as the world's biggest automotive market this year, according to industry executives. Sales in China will rise by a minimum 35 percent to 12.6 million vehicles this year and may top 13 million units, Xu Chanming, research director at the State Information Center advisory body, said on Sept. 25. India's car sales in the five months through August rose 13 percent from a year earlier.

Tight Chinese Capacity

Volkswagen is the largest overseas passenger-car manufacturer in China. Eight-month sales of all its brands in the country rose 33 percent from a year earlier to 913,000 vehicles, and the company has said growth is lagging behind the market's expansion because production hasn't kept up with demand. Volkswagen's Audi luxury unit said two days ago that Chinese deliveries rose 37 percent in September.

"We're hoping that China will be able to continue its strong uptrend,"Winterkorn said. "As we reach capacity limits there, we'll continue to invest in expansion and new products."

Germany's auto-industry association is forecasting domestic sales this year at "well over"3.5 million cars, a 13 percent increase from 2008, after a government rebate program to encourage trade-ins of obsolete models for scrap prompted a rebound from a decline early in 2009. Schmidt, who took his post at Stuttgart-based Daimler a week ago, said today that the market may recover to current levels in 2011.

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