Shanghai Volkswagen Automobile Co, the German carmaker Volkswagen's joint venture with the Shanghai Automotive Industry Corp (SAIC), has vowed to take aggressive marketing and sales measures to maintain its two-decade lead in China's car market.

In an exclusive interview with China Daily, Ye Yongming, Shanghai Volkswagen's executive marketing and sales director, said the venture is reshuffling its dealers to improve their abilities in sales, services, human resources and financing. It is all part of the effort to sell over 300,000 cars this year and head off growing competition from US and Asian rivals, such as General Motors (GM), Honda and Hyundai.

"Dealers which fail to meet our customer satisfaction standards will be ruled out," Ye said. "Many small dealers will be merged into big ones."

Shanghai Volkswagen, the No 1 Sino-foreign car venture since its establishment in 1985, has experienced a year-on-year reduction in sales from last year. This is deemed due to inefficient marketing and sales forces as well as stiff competition.

GM's venture with SAIC sells Buick and Chevrolet-branded cars and has overtaken Shanghai Volkswagen, moving to the top so far this year. The GM venture sold 175,100 cars to dealers in the first eight months of this year, according to statistics from the China Association of Automobile Manufacturers.

Meanwhile, Shanghai Volkswagen's wholesale figure for the same period stood at 132,100 cars, coming in at No 4 in China.

However, Shanghai Volkswagen's sales-to-end users reached 180,350 cars for the January-August period this year. Industry observers said its retail sales still ranked No 1 in China.

Shanghai Volkswagen has already gotten rid of 28 unqualified dealers this year. Now, the venture has 420 dealers across China.

Of those, it has only signed one-year contracts with around 100, to review whether they can meet its high standards, according to Ye.

The venture and Volkswagen's other venture with the First Automotive Works Corp are the only two carmakers in China which report figures for sales-to-end users.

"Shanghai Volkswagen was a product-oriented carmaker in the domestic car market which used to be dominated by institutional buyers. But now, we have to shift to a marketing and sales-oriented company and respond quickly to market changes, with the number of individual buyers growing rapidly," Ye said.

More than 70 percent of new cars are now sold to individual customers in China, up from 30 percent five years ago, according to Ye.

Shanghai Volkswagen has divided cars selling for between 60,000 yuan (US$3,400) and 300,000 yuan (US$37,000) into eight different segments for market research purposes, he said.

Shanghai Volkswagen's marketing and sales measures have paid off this year, he added.

According to a recent survey by car consumer research firm JD Power, the ranking of Shanghai Volkswagen's sales satisfaction index has climbed to No 7 this year from No 12 last year.

As part of its marketing and sales campaign, the venture cut prices of the Golf, Santana and Passat by as much as 13.7 percent at the beginning of August. Sales that month grew by 13.5 percent from July, to 22,200 cars.

(China Daily September 27, 2005)