It is a small milestone in the rapid rise of the Chinese economy: For the first time, more Volkswagens will be sold in China this year than in the United States.
German automaker Volkswagen AG announced today that it was on track to sell a record 500,000 cars in China by the end of the year, a 40 percent jump over last year's figure. Meanwhile in the United States, sales are down 3 percent and are expected to total about 425,000 vehicles.
The surge in Volkswagen purchases in China reflects the fast pace of economic growth in the world's most populous nation, where urban families with rising incomes are embracing car ownership as a symbol of middle-class achievement.
"We are experiencing one of the greatest increases in the sales of vehicles in a single market worldwide ever," said Robert Buchelhofer, president of Volkswagen Asia-Pacific. As a result, he said, China has replaced the United States as the company's largest foreign market.
Automakers sold about 750,000 cars in China last year, a tenth the total in the United States, but car sales are growing faster here than anywhere else in the world, up 55 percent in the first 10 months of the year.
Analysts predict China will be the world's third-largest auto market -- behind the United States and Japan -- within years, and the world's largest in the next two decades.
With China's entry into the World Trade Organization easing trade barriers, the giants in the industry are all fighting to forge partnerships with Chinese manufacturers and expand production here. General Motors Corp., Honda Motor Co. and Toyota Motor Corp. have placed large bets on plans for large-scale plants, while Ford Motor Co., DaimlerChrysler AG, BMW AG and Nissan Motor Co. have set up smaller operations.
Volkswagen, the first foreign carmaker to open a plant in China, dominates the competition, and it announced plans today to begin exporting cars from its China joint ventures next year.
It also rolled out two new compact models for the Chinese market.
Volkswagen built its success in China with mid-sized sedans but started when almost all cars were purchased by government offices and state-owned businesses. Today, private buyers make up the fastest-growing market segment and already account for half of all new cars sold.
Many of these middle-class urban Chinese can't afford sedans, and Volkswagen's market share fell from 50 percent of all new cars sold to 40 percent this year, largely because of inroads made by a compact model GM introduced in June.