Bad Times for VW in China

Volkswagen AG posted its first decline in Chinese deliveries in 10 years after six-month sales fell because of the slowing economy, as once-hot emerging markets become a drag on the world’s second-largest automaker.

VW’s deliveries in China, its largest market, dropped 3.9 percent to 1.74 million vehicles in the period, the company said in a statement. First-half sales in China last fell in 2005, when deliveries slumped 14 percent. VW also struggled in Russia, where sales plunged 41 percent, while the German automaker’s Brazilian demand tumbled 30 percent. Globally, VW’s deliveries slipped 0.5 percent to 5.04 million cars and trucks.

“Developments in South America and Russia remain tense, as do conditions in China, where growth on the overall market has been shrinking steadily,” Christian Klingler, Volkswagen’s sales chief, said in the statement.

Auto sales have slowed this year in China after economic growth moderated, more cities capped the number of new cars, and a volatile stock market diverted funds from vehicle purchases. Demand has slowed for VW and other carmakers in China despite increasing discounts and financial assistance to distributors, according to Bloomberg.