Volkswagen says demand for its cars in China is almost as high as it was this time last year, underlining the speed of the recovery in the brand’s most profitable market.
The German carmaker said it suffered just a 2 per cent fall in sales in April, despite the overall auto sector in the country declining by an estimated 7 per cent in the same period.
It added that it expected business in China to reach the same monthly levels in May as it did in 2019.
“China is quickly closing the gap,” Jürgen Stackmann, VW brand’s board member for sales, told reporters, after the group’s boss in the country Stephan Wöllenstein predicted the carmaker could see a “yearly result that is not so far away from our original plan,” if the region’s “outstanding economic comeback” continued.
However, Mr Stackmann warned that the so-called V-shaped recovery in China was unlikely to be replicated in Europe, where the economy would be slower to improve.
Although VW’s market share grew in every region around the world in 2020, “China is quite unique as it has such a stunningly strong underlying demand still of first-time buyers,” the executive said.
“That doesn’t exist in Europe. We all have cars. So it’s like a repeat purchase for a majority of Europeans.”
Mr Stackmann’s caution was echoed by BMW chief Oliver Zipse on Wednesday, who warned that China was “only of limited use as a blueprint for development in other markets.”
“In our most important sales region, Europe, the picture is extremely mixed,” Mr Zipse said.
“It is clear that automotive demand in countries that have been hard hit by the pandemic, like Spain, Italy and the UK, will probably remain relatively low for the rest of the year.”
Figures released on Wednesday showed that the German auto market had contracted 61 per cent in April, with just 121,000 new passenger cars registered — the lowest number since reunification in 1990. The UK, Spain and Italy suffered declines of about 97 per cent.
Mr Zipse’s comments came after BMW warned that profits in its carmaking division might be reduced to zero in 2020, as it grapples with factory shutdowns and plummeting sales.
Margins at the unit, which includes the Mini and Rolls-Royce brands, were likely to range between 0 and 3 per cent, the Munich-based company said, adding that it no longer expected to achieve a positive free cash flow in its automotive business this year.
“Measures to contain the coronavirus pandemic are lasting longer in several markets and are thus leading to a broader negative impact than was foreseeable in mid-March,” BMW said in a statement.
The premium manufacturer, which also announced it was postponing a decision to build a plant in Hungary, said its updated forecast did not take into account the implications of a possible second wave of infections, and subsequent lockdowns.
Despite signs of a recovery in China in late March and April, BMW said sales in Asia, also its most profitable market, fell by a quarter.
Official Chinese car sales figures for April are not due to be released until next week.
Additional reporting by Christian Shepherd