Volkswagen AG (VOW) is poised to sell more vehicles in China than General Motors Co. (GM:US) for the first time in nine years, regaining its place as the biggest foreign carmaker in the world’s largest auto market.
Both companies have surpassed their targets to deliver more than 3 million vehicles in China this year, with Volkswagen crossing the mark on Dec. 5 and GM a week later. The German automaker held a lead of about 70,000 vehicles through the first 11 months, according to data from the automakers.
Competition is set to intensify between the top European and American automakers, which have announced a combined $36 billion in investment for China even as more of the nation’s cities consider vehicle restrictions to cut pollution. Toyota Motor Corp. (7203), still recovering from a consumer backlash, was outsold by Ford Motor Co. (F:US) in the country this year.
“China is the big battleground,” said Klaus Paur, Shanghai-based global head of automotive at market researcher Ipsos. “At the same time, there’s a risk of an over-dependence on the Chinese market. As long as this is all working well, it’s wonderful but if something gets in the way, then the exposure to risk is even bigger.”
Volkswagen said last month that it will invest 18.2 billion euros ($25 billion) through 2018 to expand in China. In the first 11 months of this year, the Wolfsburg, Germany-based automaker boosted sales by 17 percent to 2.96 million vehicles, with its namesake brand accounting for almost 80 percent of the deliveries. The carmaker also owns marques such as Skoda, Audi, Porsche, Bentley, Lamborghini and Seat.
“You really have to understand that at present, we really have capacity problems, Jochem Heizmann, president and CEO of Volkswagen’s China operations, said in an interview last month. ‘‘We could sell more.’’
Volkswagen’s Audi, the top-selling premium brand in China, will start selling the locally made A3 compact sedan and a new version of the A4 next year, according to John Zeng, Shanghai-based managing director of market researcher LMC Automotive. Other planned models include the new VW Bora and Skoda Octavia sedans, he said.
At GM, the new year will be marked by changes in leadership.
Mary Barra will succeed Dan Akerson as chief executive officer in January, becoming the industry’s first female CEO. In China, Matthew Tsien was appointed to oversee GM’s largest market from January, taking over from Bob Socia, who is retiring.
GM will introduce four new Chevrolet models in China next year, according to John Stadwick, a vice president of sales and marketing. A lack of new models has hampered the growth of the brand, which has lagged behind the industry average this year, Socia said in October.
The low-cost Baojun brand will also be expanded next year by adding a compact hatchback and multipurpose vehicle, according to Raymond Bierzynski, executive vice president of SAIC-GM-Wuling, the GM local joint venture.
GM sells passenger vehicles in China under its Buick, Chevrolet, Cadillac, Opel and Baojun nameplates, and also counts the Wuling brand of mini-commercial vehicles. Excluding Wuling from the tally, as researchers such as IHS Automotive and LMC Automotive do, the Volkswagen marque alone outsells GM’s main Buick, Chevrolet and Cadillac brands combined, according to company data compiled by Bloomberg.
Industrywide, total sales of vehicles -- including buses and trucks -- reached 19.9 million units this year through November, putting China on course to be the first country to surpass 20 million units in annual vehicle sales.
China’s vehicle sales will ‘‘rise steadily” next year, according to the automobile association’s secretary general Dong Yang, declining to give a specific forecast. IHS Automotive predicts the passenger vehicle market to expand 10 percent next year on continued demand from smaller cities.
The increasing risk to rosy projections for China’s vehicle sales -- Ford predicts 32 million a year by 2020 -- is pollution, which has become the top cause of social unrest in the country and forcing authorities to impose restrictions on vehicle usage and ownership.
Tianjin, a port city about 114 kilometers (70 miles) from Beijing, became the latest municipality to cap the number of new license plates, according to the Xinhua News Agency.
The city joins Beijing, Shanghai, Guangzhou and Guiyang among those that control the number of new vehicles allowed each year to ease congestion and emissions.
Shanghai was blanketed by record smog pollution this month and is studying a congestion charge, which would be a first for China if implemented. The city already sets a limit on the number of new license plates each year and sells them through auctions.
Other cities including Shenzhen, Chengdu and Chongqing are considering quotas to tackle congestion, the automakers association said in July.
“Tianjin won’t be the last city limiting vehicle purchase,” Cao He, a Beijing-based auto analyst with China Minzu Securities Co., who predicts five cities will impose limits on vehicle purchases next year. “The ironic part of such policy is that it may actually spur purchase in a lot of cities as people concerned about the possibility of such ban dropping on their heads just overnight.”
Automakers remain undeterred, lured by lower vehicle ownership rates and rising incomes.
Among the newcomers, Tata Motors Ltd. (TTMT)’s Jaguar Land Rover sales gained 28 percent in the first 11 months of this year to 83,499 vehicles on demand for the Range Rover Sport and Evoque SUVs. The Gaydon, England-based company is set to start producing cars in China next year, allowing it to avoid the nation’s 25 percent import duty.
Fiat SpA is negotiating to produce Jeep vehicles in China after production stopped in 2006.
Volvo Car Group, owned by Zhejiang Geely Holding Group Co., posted a 45 percent gain in sales this year and expects sales next year to be strong with the production of the S60L sedan in China since November, said Lars Danielson, the company’s senior vice president.
Japanese carmakers have seen their market share in China rebound to 19 percent in November from 13 percent in January, after increasing incentives to win back sales lost to a backlash over a territorial dispute between the two countries, according to the China Association of Automobile Manufacturers.
A visit today by Prime Minister Shinzo Abe to Tokyo’s Yasukuni Shrine, which honors the war-dead including including 14 World War II leaders convicted as Class-A war criminals, drew a condemnation from China.
At Ford, the introduction this year of the EcoSport and Kuga SUVs helped the Dearborn, Michigan-based carmaker overtake Toyota to become No. 5 in the China rankings.
Ford’s China sales rose 51 percent through November to a record 840,975 vehicles, aided by its Focus compact, which was China’s best-selling car this year. By comparison, Toyota sold 809,000 units in the same period for a 8 percent gain, as Japanese brands recovered from last year’s consumer backlash.
“We have built a lot of momentum this year, and it’s really been on the strength of all those products that I mentioned,” David Schoch, Ford’s Asia Pacific president, told reporters at an event for the new Ford Mustang on Dec. 5. “We’ve got more coming next year.”
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