Volkswagen's two Chinese joint ventures regained their crown as the No 1 and No 2 passenger car sellers in the nation last month after being topped in June by local operations of General Motors (GM) and Honda Motor.

Sales of the German company's venture with Shanghai Automotive Industry Corp (SAIC) grew by 39.7 percent from June to 28,060 cars last month.

The other venture with First Automotive Works Corp in northeast China's Jilin Province, sold 22,155 cars in July, up from 12,786 units in June.

Officials from the two ventures said that their sales rebound partly resulted from price cuts of nearly all products in June.

The two ventures slashed prices by as much as 11.7 percent on June 17 to stave off pressures from the price cuts of rivals, mainly General Motors, and growth decline of overall car sales in China.

Shanghai Volkswagen and FAW Volkswagen were outsold by GM's joint venture with SAIC and that of Honda with Guangzhou Automobile Group in June for the first time.

However, Shanghai GM's sales plunged to 19,660 cars in July from 24,040 units in June.

A Shanghai GM spokesperson Monday cited the venture's "10-day annual equipment maintenance and production line check" as the main reason for the sales decline.

Shanghai GM cut prices by up to 11 percent in May.

Guangzhou Honda said that it sold 20,869 cars last month, down from 21,275 units in June.

A top executive of Guangzhou Honda vowed last week that prices of its products would remain unchanged this year.

"There will be fiercer see-saw battles between these top ventures for the rest of this year," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

Car makers in China are likely to wage a new round of price wars later this year to fight for market shares, Zhang said.

Prices of many cars declined over the past week, such as Sonata of Beijing Hyundai, Blue Bird of the joint venture between Dongfeng and Nissan, Excelle of Shanghai GM and Vios of Tianjin Toyota.

"More players will join the pack at the top, including ventures of Toyota and Ford in China, in the near future as their sales are growing significantly," said Jia Xinguang of China Automotive Industry Consulting and Development Corp.

Ford's joint venture with Chang'an Motor began construction on a new 200,000-unit plant in co-operation with Mazda in east China's Jiangsu Province 10 days ago.

It is reported that the joint venture will soon produce Ford's Focus.

Toyota's new joint venture with Guangzhou Automobile Group has been approved by the Chinese Government. The expected venture will produce the Camry sedan, one of the most popular imports in China.

"However, Volkswagen's overall leadership in China's car market can not be overthrown in a short period of time," Zhang said.

Volkswagen said that it aimed to sell 800,000 cars this year in China, up from almost 700,000 units last year.

Sales of the German firm's venture in Shanghai and Jilin stood at 207,200 and 149,300 cars respectively during the first seven months of this year.

Volkswagen's Jetta, made at the venture in Jilin, remains the single best-selling model in China with accumulated sales of 76,068 units during the period and 13,500 units in July alone.

The venture officials attributed Jetta's success largely to its "durable quality and superior after-sales services."

Shanghai GM sold 160,982 cars during the first seven months of this year, up 79.3 percent from a year earlier.

Jia said that there was no big rebound of car sales in China in July from the consecutive monthly tumbles in April and June, although the latest statistics have not been revealed.

He predicted that total car sales in China would grow by some 30 percent this year, down from 75 percent last year.

Sales of domestically-made passenger cars rose by 31.6 percent to 1.13 million units during the first half of this year.

(China Daily August 3, 2004)