VW China says growth to slow to 10% on lack of capacity

Expansion may slow but the German car giant is still bullish on China long-term

Volkswagen AG’s growth in China may slow to around 10% in 2014, from 2013 levels of 16%. The primary reason for the contraction is the company’s limited production capacity.

Last year VW announced plans to invest €18.2bn from 2014 to 2018 to boost production to more than four million vehicles per year.

Across the Group - which also includes Audi, Porsche and Skoda - VW’s China arm looks set to deliver 3.6m vehicles this year.

VW found itself in trouble in November following poor handling of a 600,000 vehicle recall when the new Sagitar and Beetle models were found to have potentially defective rear axles.

Despite the economy slowing to its weakest pace since the first quarter of 2009, foreign automakers remain bullish about the Chinese auto market, especially the growing luxury car segment. Most of this growth is expecting to come from the nation’s booming middle class, although sales of ultra-luxury cars with a price of more than 2m yuan ($327,000) are likely to stall.