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VW not driving away from B-segment

Shanghai Volkswagen Automobile Co Ltd is not driving away from the mid-to-high class passenger car segment of the market in China even as the government is aggressively encouraging small fuel-efficient vehicles.

"Sales for the B-segment fell for the first quarter this year, which is opposite to what happened in the small car segment," said Frank Brustmann, vice president of Shanghai Volkswagen, referring to the mid-to-high class sedans. He added that regardless of the government policy on small cars, there is still demand for autos in the B-segment and so car makers will still invest in this sector.

Sales of small vehicles soared 22 percent to 1.41 million units for the first quarter this year, against a 7-percent rise for the overall market after the government halved the sales tax on cars with engine capacity of 1.6 liters or below.

The nation's second-largest passenger car maker by sales last year introduced a revamped Passat Lingyu at Auto Shanghai 2009. The Passat New Lingyu, to be launched later this month, will be sold in three-engine versions of 2-liters, 1.8-turbo and 2.8-liters.

Shanghai VW expects the new model to grab a 9-percent market share in the mid-to-high class segment. The model will compete with Toyota's Camry and Honda's Accord.

Sales of Shanghai VW, which sells VW's Santana, Polo and Lavida, gained 6 percent to 130,000 units in the first quarter. Sales in March even jumped 26 percent from a month earlier.

Brustmann said the car maker has boosted capacity as it is confident the strong sales will continue in the second quarter.

"We have to be careful regarding some projections for the whole year, but we are quite optimistic this year will be at least on the level of 2008 and hopefully could be a little bit better," he said.


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