Volkswagen on Friday said that its sales dropped 11.3% in China in January on a year-over-year basis owing to the coronavirus outbreak in the country that is also taking a toll on the production and sales of all major carmakers across the world. Volkswagen has a huge presence in China and the decline definitely is going to hurt the company in the near term.

Automakers across the world with a sizeable presence in China have been feeling the heat of coronavirus outbreak over the past few weeks. The crisis only seems to be deepening with the death toll increasing every day.

Volkswagen feels the heat

Volkswagen
Volkswagen Pixabay

The German automaker on Friday said that it managed to deliver only 343,400 vehicles in China and Hong Kong in January, down from 387,300 the year earlier. These include brands like the VW marquee, Audi, Porsche and Skoda. China is Volkswagen's biggest market and the decline in sales is a clear indication that it will now start biting into the company's profits.

In December, before the coronavirus outbreak compelled many automakers to temporarily halt operations in China, Volkswagen sales in terms of deliveries in China were up 17% on a year-over-year basis. In fact, despite the carmaker's decline worldwide sales, it witnessed a rise of 0.6% in sales in 2019 in China. Volkswagen sold 4.2 million cars in China in 2019.

Automakers continue to suffer in China

Cars
Representational image Pixabay

Carmakers across the globe with a sizeable presence have been suffering due to the coronavirus outbreak in China. Most major carmakers have temporarily halted production in their China facilities and have also withdrawn their employees.

China is the biggest car market in the world but a slowing economy had already seen a decline in sales of cars in that country. The outbreak of coronavirus has only worsened the situation. On Thursday, The China Association of Automobile Manufacturers said that sales of vehicles fell by almost a fifth in the country in January. This is the 19th straight months of decline in China.

Volkswagen already has been embroiled in a lot of controversy and the decline in sales in China is further going to hurt the company. Worldwide, Volkswagen's deliveries declined 5.2% to 836,800 units in January. Volkswagen has around two dozen plants in China that produce more than 4 million vehicles annually. A temporary shutdown means the company will be producing hundreds of thousands of fewer cars every week, which is likely to impact its global sales and deliveries.