VW hopes to revive leadership status in China

New Passat aimed more at individuals than corporate sales

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SHANGHAI--Volkswagen was the first foreign car maker to establish factories in China 15 years ago, and once accounted for half of all passenger car sales in that market. But its market share is now well below 20%, it faces stiff competition from Ford Motor Co. and General Motors Corp. (which expects to overtake VW as China’s No. 1 car seller in China this year) and overcapacity is a real concern now that new models from Japanese and Korean auto giants, as well as local companies, are flooding the market.

In an effort to revive its fortunes in China, VW has swung into action to give its flagship Passat brand a much-needed facelift and try to boost VW’s corporate image as well.

Passat, produced locally by Shanghai VW, a joint venture with Shanghai Automotive Industry Corp., has long been VW’s top-of-the-range car model in China, if not the company’s bestseller (that's Santana, the favorite of taxi drivers), but the car’s image has barely changed in the past four years.

To give the Passat brand renewed vigor in a fast-changing marketplace, Shanghai VW has come out with Passat Lingyu (Lingyu means territory) to reposition the brand as younger and more daring against rivals such as Ford’s Mondeo, Buick sedans and the Audi A4. The car is priced between RMB214,800 and RMB318,000 ($26,590-$39,366).

“Consumers are changing. Before sales came more from government and companies, but now there are more small business owners and entrepreneurs as well as executives who have reached mid-management. They want a car that is more personal,” said Stewart Szeto, Shanghai-based business director, SVW, at WPP Group’s Grey Global Group, Passat's agency in China.

Passat consumers, he added, are “mostly mid-thirties and know they will move forward, but they are not hyper-aggressive opportunists, they have conservative and stable personalities and plan to grow through hard work, knowledge, and calculated risks.”

To meet this demographic, marketing for the Passat Lingyu positions the car as smooth and easy to handle, as well as more dynamic and sporty. The TVC features a confidential young executive riding through a modern landscape, ending with the tagline: “If you have the determination to control something within your territory, you can do whatever you want.” The car is also marketed through print, radio and online media as well as a CRM campaign.

To increase the new Passat’s appeal, VW added features such as DVD players, better leather on the seating, and a nicer dashboard to make the car more elegant and comfortable. Design changes include a new front grill, through collaboration with Murak Gunak, Volkswagen’s design chief in Germany, formerly responsible for Mercedes Benz, Peugeot and BMW designs.
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