Volkswagen's China Sales Drop After Coronavirus Shutdown
February 14 2020 - 10:39AM
Dow Jones News
By William Boston
BERLIN -- Volkswagen AG, the world's biggest car maker by sales,
on Friday reported an 11% drop in sales in China in January, as the
coronavirus outbreak begins to take a toll on the auto
industry.
Auto manufacturers are deeply invested in China, and analysts
say the virtual lockdown of some of the country's biggest cities in
an effort to stop the virus from spreading is going to hit
first-quarter sales and earnings hard.
The outbreak is the latest blow to an industry that was already
reeling from a sharp slowdown in global demand last year, the huge
cost of switching to electric vehicles, and increasingly onerous
carbon emission legislation, particularly in Europe.
The disruptions caused by the virus have caused complications
for globally connected manufacturers across industries, many of
whom rely on at least some components made in China.
Volkswagen, whose brands sold in the market include the namesake
VW marque, Audi, Porsche and Skoda, is China's largest foreign car
maker. It sold 343,400 vehicles in China last month, down from
387,300 the year before.
In December, before the coronavirus caused auto makers to shut
down China plants, Volkswagen deliveries to customers in the
world's biggest car market by sales were up 17% from a year ago.
VW's sales in China rose 0.6% to 4.2 million in 2019.
The news of the sharp fall in sales in the company's largest
single market stole the momentum from VW's shares, which had been
trading higher before Friday's news in Frankfurt. By early
afternoon, VW shares were in retreat, trading nearly 1% lower.
Volkswagen operates nearly two dozen plants in China that
produce more than four million vehicles a year. A shutdown of the
plants until this week means that the company will likely produce
hundreds of thousands fewer vehicles in the first three months of
the year, and it is still unclear when China's auto market will
return to normal. Volkswagen is planning to reactivate its plants
next week.
VW said that world-wide sales fell 5.2% to 836,800 vehicles in
January, with the strongest decline coming in China. Sales in North
America were up nearly 5%.
Separately, French car maker Renault SA's interim CEO Clotilde
Delbos said the company was "a little concerned" about future
coronavirus developments, citing a decision to shut down its Korean
plant for four days this week.
"We don't know yet what the impact is going to be. Nobody around
the world knows how long this topic will impact us," she told
analysts in Paris on Friday.
VW also continues to battle with the fallout from its 2015
diesel-emissions scandal. VW said that talks to settle the first
major consumer lawsuit in the diesel affair had collapsed. VW said
it had offered to settle the German case with a payment of EUR870
million ($943.3 million), but the agreement failed over a dispute
over EUR50 million in plaintiff lawyer fees.
German consumer group VZBV disputes VW's explanation, saying
there had been agreement on the legal fees but not about how the
award would be distributed to plaintiffs.
So far, VW has paid around $30 billion in fines, penalties,
legal fees, and to settle consumer litigation for compensation.
Nick Kostov contributed to this article
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
February 14, 2020 10:24 ET (15:24 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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