January 23, 2018 / 5:54 AM / a year ago

UPDATE 1-Volkswagen Group sees China passenger market growing 4 pct in 2018

* VW Group sees its China sales tracking overall market growth

* Group’s 2017 sales growth in China outstripped overall market

* German automaker expects its SUV push to drive sales in China (Adds details, quotes)

By Norihiko Shirouzu

BEIJING, Jan 23 (Reuters) - Volkswagen expects China’s passenger car market to rise around 4 percent in 2018, with the German company’s own vehicle sales in the country growing at a similar pace partly due to its continued emphasis on sport-utility vehicles.

Volkswagen Group China, which includes brands such as Audi, Skoda, Seat as well as Volkswagen, sold a total of 4.18 million vehicles in China last year, an increase of “a little bit more than 5 percent” from 2016, Volkswagen’s China chief, Jochem Heizmann, said at a media roundtable in Beijing on Tuesday.

The growth last year outpaced overall gains in the world’s biggest auto market, and Heizmann said Volkswagen Group China does not expect sales growth to fall short this year.

Volkswagen expects China’s overall 2018 passenger car market to grow at around the same pace as last year, which the German executive said was about 4 percent.

“Our intention is not to be behind that as VW Group China this year,” Heizmann told a small group of reporters.

Heizmann said the new year will likely start slowly but will likely pick up steam later, adding Volkswagen would reap the benefits of an SUV push.

China’s vehicle market “is going strongly in the direction that half of the passenger car volume will be SUVs”, Heizmann said. “Out SUV offensive will continue this year.”

Aside from the traditional business, the automaker plans to add volume by selling more so-called new energy vehicles (NEVs), which in China means either all-electric battery cars or plug-in electric hybrid vehicles.

China has set strict quotas for electric and plug-in hybrid cars that come into effect from 2019. It has an ambitious target of 2 million NEV sales by 2020 and has signalled longer-term it will phase out the sale of conventional petrol-engine cars.

Heizmann reiterated that the Volkswagen Group’s immediate target was to sell 400,000 NEVs by 2020, with an aim to boost the volume to 1.5 million by 2025.

Over the next 7-8 years “we are planning about 40 new locally produced NEVs”, Heizmann said. (Reporting by Norihiko Shirouzu in BEIJING, writing by Brenda Goh in SHANGHAI; Editing by Himani Sarkar)

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