WITH pre-tax profits of around one billion yuan (about HK$746 million) and a 50 per cent increase in production last year, Shanghai Volkswagen could be forgiven for indulging in a spot of self-congratulatory back slapping when the 100,000th Santana saloonrolled off the production line.
But the festive atmosphere at the sprawling car plant to the northwest of Shanghai belies an uncertain future for one of the most profitable and prestigious joint ventures in China.
Demand for passenger cars is set to maintain its spectacular growth this year but it is by no means certain that Shanghai Volkswagen, which has been producing cars in China since 1986, will be able to produce enough vehicles to meet that demand or keep its dominant market share.
According to the company's latest estimates, the plant will produce about 115,000 vehicles this year and 150,000 in 1995 when a second car plant, formerly home to the lumbering Shanghai Sedan which went out of production in 1992, comes on stream.
The old Shanghai Sedan plant was taken over by the joint venture in 1992 and is being demolished to make way for a brand new plant with a capacity of 180,000 cars a year.
The company hopes to have a combined production from the two plants of 300,000 units a year by the end of 1997.
