BEIJING: Volkswagen will keep adding capacity in China as the German group is counting on double-digit growth in the biggest auto market, helped by strong economic growth in interior regions.
Europe’s largest carmaker said in March 2013 it was planning to almost double production capacity in China to be able to make more than 4 million vehicles in its largest market by 2018. “We will further expand our capacities to be able to respond to the high market growth,” Jochem Heizmann, head of VW’s China operations told reporters yesterday ahead of the Beijing auto show.
He predicted the Chinese car market would grow by as much as 10 percent this year. VW increased its own deliveries in the country 16 percent in 2013 to 3.27 million autos. VW, one of the first global automakers to establish production facilities in China during the 1980s, is evolving its operations in the country by leading a “Go West” strategy, as well as a “Go South” strategy.
“A large sales potential for passenger cars will develop there fairly quickly,” said Heizmann.
Growing volume in China, where VW also sells the Audi, Skoda, Lamborghini, Bentley and Bugatti brands, is the main pillar in the manufacturer’s goal to eclipse Toyota as the world’s largest carmaker by 2018.
To foster growth, VW will expand its Chinese distribution network to 2,750 dealers this year and 3,600 by 2018, from 2,400 last year. Heizmann also said VW was “on a very good track” toward deepening cooperation with its Chinese partner First Automotive Works (FAW). VW has been in talks with FAW to raise its stake in their joint venture to 50 percent from 40 percent.
Meanwhile, Volkswagen has agreed the basic concept and design of a budget car for emerging markets, a VW manager said, nearing the project’s completion after a long struggle to meet cost targets for the vehicle.
Europe’s largest carmaker has been trying for more than a year to hit internal cost goals for the model, which would likely sell for between €6,000 and €8,000 and be built in China, the biggest market for low-cost cars. “The concept and design are now in place,” Hans Demant, responsible for the so-called budget car project at VW, said. “We will produce all components in China.”
VW lacks a strong presence in markets such as India and southeast Asia which are dominated by no-frills models, and without a successful budget car, analysts have questioned whether the group will be able to meet its goal of becoming the world’s biggest carmaker by 2018.
Reuters
