Weiming SU, member of Volkswagen Group (China) board of directors, and vice president of marketing and sales executive, told media recently that Volkswagen imported auto will cooperate with Shanghai Volkswagen strategically. Volkswagen China will build shop-in-shop in the picked 30 dealers in third-tier and fourth-tier cite to sell its imported Touareg and Multivan T5, and provide authorized repairing and spare parts service for the two models.
It is another strategic cooperation between Volkswagen China and Shanghai Volkswagen after imported Skoda business, and it will benefit both sides. The cooperation will help Volkswagen Group increasing market share in China, and cut into third-tier and fourth-tier markets by channel of Shanghai Volkswagen. On the other side, Shanghai Volkswagen will extend its upper SUV and upper commercial auto segments market share and profit.
At it known, imported auto market has increased 35% from 2008 to 2012. Volkswagen imported business has increased 64.8%. Weiming Su forecasts that Volkswagen imported auto growth this year is around 4%- 5%, which is not as fast as before. It is eager to motivate imported auto business.
According to Weiming Su introduction, few dealers picked this time operate both Shanghai Volkswagen and Volkswagen imported. Up to August 2013, Shanghai Volkswagen owns 979 service shops, covers 80% cites in China, and 1 million sales volume accumulating from January to August. However, Volkswagen imported auto only has 123 sales shops at present, and it only sells 32 thousand in the first 5 months this year.
Network enlarging this time focuses on third-tier and fourth-tier cites, Weiming Su explains that imported Volkswagen permeability (based on cities) is only 22%, which means only 22 out of 100 cities has its shop. ¡°We only take 4% market share in those cities, which is far away from 10% market share in first-tier and second-tier cities. Volkswagen imported car is not luxury, but its shop building cost is not low.¡± Weiming Su said it is very different from buliding 100 shops in first-tier and second-tier cities to 100 shops building in third-tier and fourth-tier cities. It is difficult to widely invest in shop building with the circumstances for Volkswagen Group. The group wants to remain its reputation but also watches basket profit, so it chooses joint venture Shanghai Volkswagen.
Volkswagen has stressed that it will choose the blank market of Volkswagen imported sales network, which will not influence exist sales. Besides, different from ¡°network integration¡±, Volkswagen imported adopts ¡°shop-in-shop¡± form, which will place part of its products to some authorized dealers to display and sell. The dealer and Shanghai Volkswagen will take care of the after sale service.
Some dealers are afraid that if sales volume goes up, the model will be China made, which means losing one mainstream product of Volkswagen imported dealers. Weiming Su has invited dealers to visit its Wolfsburg head office, and confirmed that Touareg will not be China made.