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Volkswagen Widens Passenger Car Sales Lead Over GM in China

Volkswagen (VLKAY) widened its lead in China over General Motors Corp. (GM) with a 28% growth in sales as the German automaker maintained its position last year as China’s largest passenger carmaker. Volkswagen outsold U.S. rival GM by 431,064 passenger cars in 2007, compared with 298,507 in 2006. Volkswagen’s China sales last year rose to 910,491 units, exceeding its sales target of 900,000. GM, through its passenger car joint venture, Shanghai General Motors Corp., sold 479,427 vehicles in China in 2007, up 16.9%.

According to an estimate from the China Association of Automobile Manufacturers in December, sales of locally made passenger cars, including SUVs and MPVs, likely rose 20.7% in 2007.

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Although GM sold a record 1.03 million passenger and commercial vehicles last year, growth slowed from the previous year. In 2006, sales at Shanghai GM were up 26.8%. Sales at GM’s commercial vehicle joint venture with SAIC and Wuling Motors, SAIC-GM-Wuling Automobile Co., rose 20.1% to 548,945 units in 2007. A year earlier, sales had risen 36.5%.

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“In order to keep up with market demand, we plan to add to what is already the largest product lineup with the rollout of several additional models in 2008,” said GM China Group President and Managing Director Kevin Wale. “At the same time, we will continue to strengthen our investment in new facilities and technology.

Volkswagen has two car making joint ventures in China: one with state-owned China FAW Group, called FAW-Volkswagen Automobile Co., and another with SAIC Motor Corp., called Shanghai Volkswagen Automotive Co. This year the German automaker expects sales to increase 15% to 20%. “We want to grow with the market,” spokesman Kai Grueber said.

Volkswagen had a market share of 11.6% in 2006 as against 11% of General Motors. Honda and Hyundai were able to get only about 5% of the market

China has become one of the world’s largest automobile market and recently surpassed Japan to become second largest. It is experiencing tremendous growth and Volkswagen has been able to capitalize on this growth and continues to grow along with the market and increasing demand in China. Volkswagen has been fortunate also to be successful in securing contracts with the Chinese government and police further increasing its market share.

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Option Strike
F 6.16 (+0.10) FBI 08 FEB 6.0 (33) 0.5 8.1 6 6
GM 23.91 (+0.41) GMBX 08 FEB 22.5 (33) 2.68 11.2 6 6
GM 23.91 (+0.41) GMBE 08 FEB 25.0 (33) 1.37 5.7 6.1 10.9
NSANY 20.29 (+0.27) QENBD 08 FEB 20.0 (33) 0.95 4.7 3.4 3.4
TM 104.18 (+1.25) TMBT 08 FEB 100.0 (33) 6.3 6 2.2 2.2
TM 104.18 (+1.25) TMBA 08 FEB 105.0 (33) 3.3 3.2 3.3 4.1
(For more details click the ticker symbol above)

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