The Volkswagen Group sees the greatest growth potential – above and beyond the established markets in China and Brazil – in India, Russia and the USA, as well as in the ASEAN and Middle East regions. We are also examining the market opportunities in particularly price-sensitive segments, which in terms of volume are particularly relevant in China and India, but also in other markets around the world.


In spite of a slowdown in the economy, the Chinese passenger car market continued to pick up speed in 2012. We are expecting a higher market volume in 2013 than in the prior year. In 2014, the vehicle market is expected to continue growing, driven by overall economic development, although growth will probably shift from the large cities on the coast to the country’s interior. To be able to leverage the considerable opportunities offered by this market and retain our market lead in China for the long term, we are continuously expanding our product range to include models that have been specially developed for this market. We are also further expanding production capacity.


Towards the end of 2011, the Brazilian government significantly raised sales tax (IPI) on imported vehicles to protect local industry and create additional incentives for investments in the automotive sector. As a result, demand for imported vehicles plummeted at the beginning of 2012. High inflation, a slow-down in lending and declining consumer confidence also impacted the passenger car market in the first half of 2012. To support its strategically important automotive industry, the government reduced sales tax (IPI) on locally produced passenger cars, which gave a major boost to the market. Demand recovered perceptibly in the second half of the reporting period, pushing up the market volume to 2.9 million vehicles at year-end, a significant increase year-on-year. Brazil remains a strategically important passenger car market for the Volkswagen Group and offers substantial potential going forward, too. We shall continue to leverage these growth opportunities in the future and to expand our market position with models that we have developed specially for this market and that we produce locally.


Volkswagen Group deliveries in India again increased in fiscal 2012 despite difficult conditions. High inflation and high fuel prices in particular impacted demand. We are forecasting that demand in the Indian market will continue to grow in the coming years. Going forward, we will significantly expand our local dealer network and invest in training for sales and service staff as well as in genuine parts logistics so as to further boost our growth in India.


The financial and economic crisis hit the Russian automotive market particularly hard. The rapid recovery in demand for vehicles in 2010 and especially in 2011 is due to the broad-based stabilization of the Russian economy. In the reporting period, the market initially benefited from comprehensive government investment programs and the positive trend on the labor market. Demand remained robust thereafter, although some momentum was lost as the year went on. Despite the more difficult environment, the Volkswagen Group saw a clear rise in its market share to 11.1%, with demand for cars climbing to 2.7 million vehicles. In the future, we expect that Russia will grow to become one of the largest automotive markets in the world. We are leveraging these growth opportunities in Russia with our plant in Kaluga, 160 km southwest of Moscow, and our contract manufacturing agreement with GAZ, a local manufacturer. GAZ has been manufacturing the ŠKODA Yeti on a full production basis since November 2012. The Jetta and the ŠKODA Octavia will also start full production in the first half of 2013. In this way, we are continuing to expand our local production capacity so as to satisfy rising demand for our models in the Russian market.


In 2012, the automotive market in the USA continued to recover from the slump in vehicle sales following the financial and economic crisis. The market for passenger cars and light commercial vehicles amounted to 14.5 million vehicles in 2012; this corresponds to an increase of 13.4% compared with the prior-year figure. The US vehicle market is expected to grow further in the coming years. We are continuing to systematically pursue our goal of developing from a niche provider into a volume supplier in the USA. The successful launch in 2010 and 2011 of the Passat and Jetta models that were designed specially for this market, as well as the construction of our manufacturing facility in Chattanooga, Tennessee, were initial key milestones in our strategy for the long-term penetration of the US dollar area. These measures allowed us to benefit more than average from the growth of the US vehicle market and increase our market share to 4.1% (2011: 3.5%). We shall continue to develop and manufacture important products for the US market locally over the coming years. This will allow us to strengthen our market position and minimize sales risks resulting from exchange rate volatility.


The Volkswagen Group is pursuing its goal of establishing a long-term presence in the ASEAN economic area, whose automotive markets offer substantial growth opportunities in the aggregate. However, the individual markets in the region are extremely mixed: demand in Thailand, for example, is mainly for pickup models, whereas in Malaysia and Indonesia demand is strongest for multi-purpose vehicles (MPVs), hatchbacks and notchbacks. High import duties, local taxes and extreme price sensitivity in the region require us to assemble our vehicles locally so as to be able to strengthen our position in these markets by offering competitive prices. Since October 2011, the Passat has been assembled at the facility operated by our Malaysian partner, DRB-HICOM. Production of the Polo hatchback and notchback and the Jetta on a CKD basis will also begin there in 2013. The Volkswagen Group Malaysia is investing in its wholesale organization and rapidly expanding its dealer network so to strengthen its sales structure. In Indonesia, we are reviewing whether to include other models in the manufacturing program there. We are also investigating and evaluating opportunities for assembling vehicles locally in other countries in the region to further strengthen our market position in the region. Independent of this, we are working hard to improve local sales structures.

Middle East

Despite the economic and political instability in the Middle East region, the market as a whole offers growth opportunities. We are leveraging this potential for sustainable growth even without our own production facilities by offering a range of vehicles that has been specifically tailored to this market. Optimized sales channels will also help to permanently increase our market share.

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