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VW’s bid to lift FAW holding thwarted
Print Edition
VOLKSWAGEN’S bid to increase its stake in a lucrative joint venture with Chinese partner FAW has stalled just as the German automaker is stepping up expansion in its biggest market, company sources said.
The setback to VW’s ambitions in China, where it sells nearly 40 percent of its vehicles, comes as Beijing seeks to promote national champions that can compete globally.
VW’s efforts to raise its 40 percent holding in FAW-Volkswagen Automotive Ltd to about 50 percent have stalled after more than a year of talks, two sources at the German company said on condition of anonymity due to the confidential nature of the matter.
“The door (leading to a higher stake) appears to be closed at the moment,” one of the sources said. VW’s efforts to increase its stake would continue, they said.
VW holds a 50 percent stake in its second Chinese joint venture, with SAIC Motor Corp Ltd. Raising its stake in the project with FAW would earn it a greater share of both ventures’ growing profits which have more than doubled since 2010 to 4.3 billion euros (US$5.4 billion) in 2013.
VW and the FAW-VW joint venture declined to comment.
There is anecdotal evidence from various companies operating in China that demands from local partners, policy-makers and regulators are getting more rigorous.
In return for winning a 25-year extension of the tie-up with FAW last month — from 2016 to 2041 — VW agreed to develop more cars in China and to use latest technologies to foster China’s push for electric and hybrid vehicles, sources said.
VW conducts most of its R&D work at its German headquarters and is reluctant to share valuable results with other parties, given the risk of counterfeiting.
VW only won Chinese approval to expand its production footprint in prosperous eastern cities last year by opening a plant in the Xinjiang Uygur Autonomous Region, one source said.
The auto sector has been under scrutiny, with Chinese anti-trust authorities pressuring VW’s Audi luxury division and the China sales unit of Fiat Chrysler among several carmakers to cut prices.
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