Car sales

Volkswagen bets big on China with three new plants poised to open this summer

Volkswagen eyes further bite of China’s booming sport utility vehicle and electric car sectors with Chinese partner FAW Group

PUBLISHED : Monday, 28 May, 2018, 8:32pm
UPDATED : Tuesday, 03 July, 2018, 8:22pm

Volkswagen is gearing up to take a further bite out of China’s booming sports utility vehicle and electric car sectors with three new factories openings this summer with Chinese partner FAW Group, the German car major said on Monday.

With the three facilities in Qingdao in Shandong province, Tianjin, and Foshan in southern Guangdong province, the world’s largest carmaker said it is well on track to hit its target of releasing 40 new locally produced new-energy models over the next seven years, and deliver up to 1.5 million new-energy cars annually by 2025, it said.

Herbert Diess, chairman and chief executive officer of Volkswagen, said the car major is committed to China and will continue to provide “high quality” products.

By advancing its local production, the German giant views the new facilities as helping streamline its regional production by better balancing the workload of its existing factories here.

“Chinese consumers today are showing strong demand for smart, sustainable electric vehicles as well as fun-to-drive, spacious SUVs,” said Diess.

China is already Volkswagen’s largest market globally. The Qingdao plant opens on Monday, the passenger car factory in Foshan is expected to start production in June, while the Tianjian plant will be ready to rolling SUVs off assembly lines in August.

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“China’s car market is still growing fast. And so are we.” added Jochem Heizmann, president and CEO of Volkswagen China.

This year, said Heizmann, after record first-quarter sales results, the company expects further growth in China’s total passenger car market of 4 to 5 per cent.

The carmaker’s global deliveries rose 7.4 per cent in the first quarter to 2.7 million vehicles from a year earlier, with more than 1 million sold in the mainland and Hong Kong, up 13.4 per cent.

Sales of sport utility vehicles accelerated 34 per cent to 100,000 units.

Volkswagen and its Chinese joint-venture partners are set to invest 15 billion (US$17.4 billion in the mainland China by 2022 to develop electric and self-driving vehicles and other mobility services.

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Volkswagen was among the first foreign carmakers to assemble vehicles in China, creating a venture with SAIC Motor 33 years ago to make the Santana, which quickly became the most popular model in the country.

FAW-Volkswagen and SAIC-Volkswagen are the top two passengers cars makers in China, contributing to 29 per cent of the mainland’s total sales in the segment, according to data from China Association of Automobile Manufacturers.

In addition to FAW and SAIC, Volkswagen has also teamed up with Anhui Jianghuai Automobile Group for a third joint venture in the mainland.