"By 2013/2014, we intend to double our capacity in China to three million vehicles per year."
The Volkswagen Group is expanding its production in China, the world’s largest auto market.
Contracts for the construction of a new plant at Foshan, in the Southern Chinese region of Guangdong, were signed today by Prof. Dr. Martin Winterkorn, Chairman of the Management Board of Volkswagen, AG, and Dr. Winfried Vahland, President and CEO of VW Group China, together with representatives of the partner FAW-Volkswagen in Foshan.
FAW is a government owned automaker, and Chinese industrial policy requires joint ventures to gain access to a market that some experts say could easily reach 20 million units annually by the end of the decade. The U.S. auto market, once the world’s largest and once the source of enormous wealth and job creation, is languishing at 11 to 12 million units annually as the Great Recession and a jobless recovery continues.
“China has become the Volkswagen Group’s largest and most important sales market. We intend to continue above-average growth with our partners. With our unprecedented investment program, we intend to double our capacities in China to three million vehicles per year by 2013/14,” said Winterkorn.
The new plant at Foshan is part of the Volkswagen Group’s aggressive long-term growth strategy where it will vie with Toyota and General Motors for the world’s largest automaker title.
VW Group is currently the largest maker in the Chinese market due to Communist government sponsorship that saw VW become the official car of the party. Volkswagen is already investing about €6 billion in new vehicles and the expansion of plants by 2012.
“In the first five months of this year, Volkswagen Group China sold about 778,000 vehicles, exceeding deliveries in the record year of 2009 by a further 48%,” Vahland said. “The tenth plant in China will further reinforce the leading market position of the Volkswagen Group.”
VW says production at the new Foshan plant, near Guangzhou, will start in mid-2013. An integrated production facility with press shop, body shop, paint shop and a final assembly line is planned on the 170-hectare site. Construction will start at the end of 2010, and the new plant will have a workforce of about 4,000 employees by 2013.
The investment of about €520 million will be funded from the cash flow of FAW Volkswagen. Together with its partners FAW-Volkswagen and Shanghai Volkswagen, the Volkswagen Group has nine plants in China, where it already produces about 20 Volkswagen, Škoda and Audi models.
In addition to the existing plants in Changchun and Chengdu, the new plant at Foshan will be the sixth facility of FAW-Volkswagen in China, and the first in Southern China.
In April 2010, the Volkswagen Group added a further €1.6 billion to its current investment in China, bringing the total to €6 billion.