Market opportunities

In addition to the established markets in Brazil and China, the greatest growth potential for the Volkswagen Group will be in India, Russia, the USA and the ASEAN region. In the past financial year, the financial and economic crisis impacted on those markets to varying degrees and led to a sometimes sharp slump in sales. The Asia-Pacific region is already the world’s largest automotive market.

The Chinese automotive market remained largely unaffected by the repercussions of the financial and economic crisis and grew strongly again in 2009. As a result, China has supplanted the USA as the world’s largest automotive market. In 2009, the number of passenger vehicle sales rose to 8.5 million units. We expect further strong growth in the coming years, too. For Volkswagen, the automotive market in China is the largest sales market worldwide and offers further growth potential going forward. By expanding our product range, increasing investment slightly and adding further production capacity, we are ideally equipping ourselves to share in the significant growth opportunities in this market and defend our leading market position.

Brazil was also one of the few automotive markets to grow in 2009. The measures taken by the government to prop up vehicle demand had a clear impact and helped to lift deliveries to a record level of over 2.5 million units. For the Volkswagen Group, Brazil remains a strategically important market that offers much potential despite the lower growth in 2010. With models that are produced locally and developed specially for the market, we will share in this growth and successfully expand our market position.

India is one of the most important potential markets in the world. Despite the repercussions of the financial and economic crisis, demand for new vehicles rose by 17.3% year-on-year in 2009 to 1.4 million units and is likely to more than double over the next ten years. India will therefore be one of the world’s key automotive markets in the future. Due to the construction of new manufacturing capacity and the start of production of Škoda and Volkswagen Passenger Cars brand models in Pune, India, particularly strong growth opportunities are opening up for the Volkswagen Group.

The Russian automotive market is among those to have been hardest hit by the financial and economic crisis. The number of vehicles sold there halved in 2009 to 1.3 million units. In this difficult environment, the Volkswagen Group managed to significantly increase its market share there to 6.5%. In the future, however, we expect a distinct recovery and steady growth, as a result of which Russia will become one of the largest automotive markets in the world. In order to leverage the growth opportunities offered by this market, the Group built a plant in Kaluga, 160 km southwest of Moscow, and in October 2009 launched full production of Volkswagen Passenger Cars and Škoda brand cars at the site, where it had previously carried out SKD assembly. The plant has an annual capacity of 150,000 vehicles.

One of the Volkswagen Group’s main goals is to sustainably develop the ASEAN market. The automotive markets in the region as a whole possess considerable growth potential. The individual markets within the ASEAN region are very heterogeneous: whereas the Thai automotive market is dominated by pick-up models, the MPV segment – that is, the hatchback and notchback segment – is particularly well developed in the markets of Indonesia and Malaysia. In the future, we will set up further sales companies in addition to those we already have in Malaysia and Singapore. Due to the legal framework and the high level of price sensitivity in the region, we can only develop these markets through local assembly or production at present. We are therefore investigating various options with potential partners with a view to achieving our goals in this region. In Indonesia, we launched local assembly of the Touran in May 2009.

The repercussions of the financial and economic crisis have led to a dramatic slump in vehicle sales in the USA. In 2009, demand amounted to 10.4 million units (–21.3%). Nevertheless, the Volkswagen Group was able to increase its market share to 2.9%. Our aim in this market is to transform ourselves from a niche player into a volume supplier offering local production of market-specific products and efficient sales structures. The construction of a production plant in Chattanooga, Tennessee, is intended to ensure our ability to sustainably develop the US dollar area and, among other things, minimize sales risks arising from exchange rate fluctuations. Starting in 2011, the plant will produce vehicles developed specially for the US market; like the facility in Kaluga, Russia, it is designed to handle an annual capacity of 150,000 units.

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