VW's China boss sees vast potential for growth
WOLFSBURG, Germany -- Despite slowing demand in China's automotive market, Jochem Heizmann, Volkswagen's new China chief, expects industry sales to grow 7 to 8 percent annually.
That's enough to justify the German automaker's ambitious plans to expand production, says Heizmann, 60, a member of VW AG's board of management with responsibility for China since Sept. 1.
In an interview with Automobilwoche, a sibling publication of Automotive News, Heizmann spelled out his views of the Chinese market.
Q: Is China due for more growth?
A: Yes, clearly. In China alone, the auto industry has grown an unimaginable average of 20 percent over the past five years. In coming years, we now expect slower growth in the range of about 7 to 8 percent. That is still strong growth compared to the current situation in Europe. That is why we are very vigilant and watch everything in this fast-moving market very closely. Our goal is to grow at least as fast as the market -- and better yet, faster.
Some major cities in China have restricted vehicle ownership. How will that affect VW?
These measures in China's metropolises have a clear effect on the market. In some cases, sales in the megacities are half what they would be if market demand were not limited. But the current restrictions should only have a limited effect on China's market potential overall. In the future, the greatest impetus for growth will come from smaller and medium-sized cities as well as the countryside.
Does VW risk overcapacity if it increases production volume in China to more than 4 million vehicles a year by 2018?
I don't see the danger of that. At this point, we are able to react very quickly. If the market were to develop completely differently from what we estimate, our internal tools will allow us to respond flexibly. And this is precisely the reason we have divided our investment plans into several stages of expansion.
Why has VW set up a China unit under its management board?
China is the VW Group's largest market and thus a key pillar in our global growth strategy. The significance of the Chinese market will continue to grow. From now on we will discuss and decide all the issues relating to our China business at the group management board level. This increases our flexibility and simplifies the course of daily business significantly.