Milan (AsiaNews) – The German company, Volkswagen is losing ground in the Chinese market which it dominated for years. As from next year it could replaced by the American General Motors as China's top car producer. The decline of Volkswagen started in 2001 when the world's big names in car manufacturing all rushed to China to grab a stake in the only opportunity for global expansion offered to firms in this sector in recent years. In effect, since starting out with very low car production volumes, the Chinese market became – within a very short time – the third largest in the world for the automobile industry. However, Volkswagen's share of the Chinese market dropped from 40% to 15% from 2001 to last year. According to Qian Xiaoyu, United Securities analyst: "For Volkswagen, the situation is never good. It must struggle to maintain its position from one year to the next. In the last six months, its position clearly declined." In this period, Volkswagen sold 220,774 cars, that is, 13.6% of the Chinese market, and this share is predicted to be 10% within the next three years.

Already in 2006, GM looks set to unseat Volkswagen with a share of 10.9% of the market. "In China," says May Arthapan, analyst with Automotives Resources Asia, "GM is a better position than Volkswagen, thanks to the models produced and to its set-up in the country". According to Ms Arthapan, "GM has a better relationship with its Chinese partners, it has better products and prices and it is more responsive than Volkswagen."  Hyundai, Toyota and Honda show a similar dynamism. More static however is the French group PSA Peugeot Citröen while the Italian Fiat group is out of the running, except for the Ferrari mark which occupies a small niche in the sector of imported cars.

According to Arthapan, the long-reaching strategic vision of Volkswagen, the first western manufacturer to venture to China 20 years ago, has more than paid off over the years. Now, however, "Volkswagen, in China as in the rest of the world, is threatened. Its lack of innovation is flagrant: its most updated model on Chinese streets is the Santana, which dates back to the eighties. It took too long to introduce new products on the market and when they arrived they were too little, too late." In the first two months of this year, the two joint companies of Volkswagen, Shanghai VW and First Automotive Works VW, lost 23 million euros while in the same period of 2004, the total profit was of 251 million euros. It could be merely a matter of different abilities in steering an enterprise during a difficult merger; 2004 was a tough year for many car manufacturers. However it could also be an emblematic case of European decline, even more evident because it is seen in relation to a very dynamic market.

It could be considered as a typical case because the car industry is characterized by the ability to assemble different components into a functional and coherent project. In other words, success in this sector hinges on possessing the following qualities all at once: a future vision, the humility to submit to the demands of the clientele and the ability to cooperate with middlemen suppliers in the integration of systems and subsystems. Precisely because of these features, the car industry of our time sums up so well – perhaps better than other industries – the dynamism inherent in society.