Cars

VW: New plants to retain auto crown

By Gong Zhengzheng (China Daily)
Updated: 2010-07-19 13:39

Volkswagen's joint venture with SAIC Motor Co Ltd signed a contract at a ceremony last Friday for construction of a new 300,000-unit plant in Yizheng, a small city in eastern Jiangsu province. [Provided to China Daily]

Lays plans for capacity of 3 million locally made cars

Beijing - German carmaker Volkswagen Group plans to massively increase its production capacity in China to meet growing demand in the world's top vehicle market.

Christian Klingler, the group's board member for sales, marketing and services, said in an interview last week that Volkswagen expects to boost its annual production capacity in China to 3 million cars over the next two to three years, up from less than 2 million units at present.

"China's vehicle market will continue to grow at an annual rate of 10 to 15 percent over the next four to five years," Klingler said.

"We have confidence in achieving our goal of delivering 2 million cars in China (annually) well ahead of our previous schedule" which was previously set at 2018 to reach the benchmark, he said.

Volkswagen's joint venture with SAIC Motor Co Ltd on Friday signed a contract to build a new 300,000-unit plant in Yizheng, a small city in eastern Jiangsu province.

The plant will be operational at the end of 2012. The joint venture now has several factories in Shanghai and Nanjing, capital of Jiangsu, with a combined production capacity of around 900,000 cars a year.

The move comes a month after Volkswagen's other joint venture, with FAW Group Corp, started building a 200,000-unit plant in Foshan in southern Guangdong province. The plant will be put into operation in 2013.

The joint venture now has two factories in Changchun, capital of northeastern Jilin province, and another in Chengdu, capital of Sichian province, with a combined production capacity of more than 800,000 units.

The new Yizheng and Foshan plants are part of Volkswagen's planned 6 billion euro ($7.74 billion) investment in China, which Klingler said demonstrates the group's commitment to its biggest single market in the globe.

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Volkswagen Group announced last week that it moved a total of 950,255 cars in China in the first half of this year, a surge of 45.7 percent year-on-year. Its sales included 755,739 Volkswagen-brand cars, 109,887 units of Audi and 84,135 cars of its Czech brand Skoda.

The robust sales help the group maintain its long-time crown of the biggest passenger car provider in China, where Volkswagen delivered 1.4 million cars last year.

In the first half of this year, overall vehicle sales jumped by 47.67 percent to 9.02 million units from a year earlier, powered by the nation's strong economic growth, according to the China Association of Automobile Manufacturers, though industry analysts say sales began to slow in the second quarter.

Klingler hinted the German carmaker could join forces with Japanese micro carmaker Suzuki - in which Volkswagen holds a 19.9 percent stake - to foray into a segment dominated by local brands.

"Suzuki is our strategic partner and it does well in the micro car segment," he said.

Volkswagen announced in April that it will launch its first electric car produced in China in 2013 or 2014.

Klingler said the group is also continuing to work on fuel cell cars.

Relying on its strategy to use conventional powertrains - with the highlight on its TSI (turbo stratified injection) engine and DSG (double-shift gearbox) technology - Volkswagen reached its target in the first half of this year to cut fuel consumption and emissions in its locally made fleet by 20 percent compared to 2005 levels.