Blog: Volkswagen feels China squeeze
Dave Leggett | 28 October 2004
One thing that stood out in Volkswagen's less than stellar Q3 results was, in amongst all the bad news explanation, the much lower contribution from sales in China this year. I recall that the analysts at Goldman Sachs highlighted lower earnings from China as a particular problem for Volkswagen some time ago. As the price war gets more intense and yet more supply comes on stream (yep, it's coming), Volkswagen faces still lower margins on each unit sold there. Therefore, it has to reduce reliance on China and look for new opportunities elsewhere, even though it has an undeniably strong position in the Chinese market. The tie-up with Proton to make VWs in Malaysia and the access to markets in southeast Asia that it could herald offers some hope.
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