VW sees multi-speed coronavirus rebound led by China

By Edward Taylor

FRANKFURT (Reuters) - Volkswagen <VOWG_p.DE> sees demand rebounding in China, helped by new buyers switching from public transport and sales of premium vehicles, but warned business would not recover from the coronavirus crisis as quickly in other parts of the world.

Sales of passenger cars in China were above year-earlier levels in the last week of April, Volkswagen executive Juergen Stackmann, who is responsible for passenger car sales and marketing at the VW brand, said on Wednesday.

"It is clear to see that China will go through a V shape (recovery)," he said. "We are not counting on a V shape recovery for Europe."

In April, sales in Germany were down 60% on the year, with the rest of Europe down 85% as some major markets like Italy and Spain ground to a halt, Stackmann said. Sales in North America were down 50%, and down 81% in South America, he added.

Among the most active buying groups in China are people who do not already own a car, Stackmann said.

"There might be a trend toward individual mobility since people want to avoid public transport these days," he said, noting that VW's Chinese budget brand Jetta had picked up market share following the relaxation of coronavirus lockdown rules.

"Jetta in the first month of reopening has been a very, very strong month," Stackmann said, adding that unlike Europe, China still had lots of first time car buyers.

Volkswagen's China executive Stephan Woellenstein, in a Linkedin post published on Wednesday, said first-time buyers now accounted for 60% of customers in China.

Wealthy customers have also returned to the market, leading Volkswagen's upmarket Bentley, Audi and Porsche brands to record year-on-year growth in the first quarter in China, despite the lockdown aimed at containing the virus, Woellenstein said.

"Should the current trend continue, we at Volkswagen Group China can be cautiously optimistic and forecast a yearly result that is not far away from our original plan," he added, referring to targets set before the pandemic hit demand.

Outside China, factories and showrooms are only gradually re-opening, resulting in an uneven recovery in demand, Stackmann said.

"We will see a two-speed Europe. Southern Europe was hit really badly. Italy, Spain and to some extent France. We expect recovery to take much longer, it will be bathtub shaped," he said.

Northern European countries, including Norway, Sweden, Denmark and Germany fared better. In Germany, sales to fleet customers remained almost at normal levels in April compared with a year earlier, he said.

Pre-booking for VW's ID 3 electric car stands at 37,000 vehicles, with demand coming from across Europe and strongest in Germany, Stackmann said.

Aside from seeking government stimulus measures, Volkswagen is adapting its financing and leasing offers to make downpayments more palatable.

Some financing offers will be stretched to 72 months, instead of 36, and Volkswagen will offer unemployment insurance, which allows new car buyers to suspend payments if they lose their job.

"Financing will become the main instrument for the industry in the months to come," Stackmann said.

(Reporting by Edward Taylor; Editing by Mark Potter)