Volkswagen to invest 14b euros in China to 2016

PUBLISHED : Friday, 23 November, 2012, 12:43pm
UPDATED : Friday, 23 November, 2012, 12:45pm

Volkswagen AG plans to invest 14 billion euros (US$18 billion) in China over the next four years, its China chief was quoted by the China Daily newspaper as saying, as it speeds up its expansion in the world’s largest car market.

Volkswagen, which produces cars in China in partnership with SAIC Motor Corporation and FAW Group, is building four plants in the country, the newspaper said, citing the German car maker’s China chief Jochem Heizmann.

Volkswagen sold two million cars in China in January-September, up 18.3 per cent and more than double the overall industry growth.

By 2018, Volkswagen’s China annual capacity will reach at least four million vehicles, Heizmann told the China Daily, adding the group’s workforce, including those at joint ventures, would rise to 85,000 within 3-5 years from 50,000 now. Heizmann was at the Guangzhou carshow on Thursday.

The German carmaker will also build plug-in hybrid cars in China within 2-3 years and make plug-in hybrid powertrains, he added. Encouraged by Beijing’s initiative to put five million electric and plug-in hybrids on the road by 2020, foreign carmakers are gearing up to tap the potential for green cars in China.

General Motors, which already sells its plug-in hybrid Chevrolet Volt in China, this week rolled out its first China-developed electric car, the Sail Springo EV. Nissan Motor Company is also promoting its Leaf electric car with local governments and will expand the effort to include its Venucia e30 China-only electric car - made at its joint venture with Dongfeng Automobile Company - next year.

Globally, Volkswagen, jostling with Toyota Motor  as the world’s number-one car maker, is expected to increase spending by 12 per cent to as much as 70 billion euros for its 12 brands over the next five years, compared with 62.4 billion euros for 2012-16 agreed a year ago, analysts have said.

That would be a record, but also represent a slowdown. The 62.4 billion euro target was more than a fifth higher than over the 2011-15 period.