AFP reports that General Motors is snapping at the heels of China’s biggest car manufacturer Volkswagen which is likely to loose its top position next year, citing analysts and industry consultants.
While the German auto giant is still the leader, its position has been eroded from 40 percent market share in 2001 to less than 15 percent.

This has seen it resort to defensive moves such as price cuts in the hopes of keeping up with the more efficient and modern operations of US-based GM, Japan’s Honda and Toyota, and Hyundai of South Korea.

“The situation for Volkswagen is still not good. It can hardly maintain last year’s position in the Chinese marketplace,” said Qian Xiaoyu, an analyst at United Securities.

“In the last six months its market share has been dropping sharply.”

Volkswagen sold 220,774 passenger vehicles in the first half of this year for a 13.6 percent share of the China market but this is forecast to slip to 10 percent over the next three years.

According to Automotive Resource Asia, Volkswagen will cling on to a slight lead in sales volume this year with 360,000 units, followed by GM and Hyundai, both with sales of around 300,000. Honda will be fourth with 230,000.

GM is then expected to take the top spot with a 10.9 percent share for 2006.

“GM are in a better position than Volkswagen in China because of their products and structure in the country,” said May Arthapan, a senior analyst at Automotive Resources Asia, a consultancy on the industry.

“They have a better relationship with their partners in China, their products and pricing (are better) … they are also more responsive to the market than Volkswagen.”

A similar sensitivity has resulted in strong sales for Hyundai, Toyota and Honda.

“Hyundai will do very well in China because they have good products and low prices,” Arthapan said. “I also see Honda and Toyota doing well in China.”