Volkswagen seeks growth with 60% hike in China output by 2018
Source: Bloomberg News |
March 15, 2013, Friday
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Print Edition
Print Edition
VOLKSWAGEN AG, Europe's largest automaker, plans to increase production by 60 percent by 2018 in China, where the German company's earnings last year surged by almost half.
A new plant in China approved by the supervisory board will build as many as 300,000 vehicles yearly and will start operating in early 2016, Chief Executive Officer Martin Winterkorn said yesterday. Capacity in China will rise to 4 million vehicles a year by 2018 as VW adds seven factories in the country, he said in a speech at the headquarters in Wolfsburg.
VW is counting on growth in China and the US, along with gains in the luxury-car segment with the Audi brand, to help offset declining demand in Europe amid a recession. Winterkorn said that VW is "feeling the headwinds" of a competitive global market, particularly in its home region.
"There's still enormous potential in China, but the market has slowed from double-digit growth to single digits, and that will remain so in the future," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. "The risk of over-dependence and overcapacity naturally rises with such a plan. It's up to VW to manage that."
The German manufacturer has a target of overtaking Toyota Motor Corp and General Motors Co to become the world's biggest carmaker by 2018. Volkswagen has automaking ventures with China FAW Group Corp and Shanghai-based SAIC Motor Corp. Deliveries by the Chinese partnerships last year totaled 2.61 million vehicles, accounting for 28 percent of the 9.35 million cars, sport-utility vehicles, vans and heavy trucks Volkswagen sold worldwide in 2012, its annual report said.
VW, which also owns the Porsche luxury-auto brand as well as the Skoda and Seat volume marques, will build at least 10 plants globally, including seven in China, Winterkorn said. That would raise the number of its factories in the country, now the world's biggest car market, to 19.
The company is looking at south or southwest China for a site, said Jochem Heizmann, head of VW's operations in the country.
GM is also a partner with SAIC, and the two are interested in buying ailing Chinese auto producers because they see the market as overdue for consolidation, people familiar with the companies' thinking said last month. Detroit-based GM, already the top foreign carmaker in China, has a target of increasing sales there by about 75 percent to 5 million vehicles by 2015, according to the people.
FAW said in early March that the government should order foreign automakers to contribute more to develop local brands.
A new plant in China approved by the supervisory board will build as many as 300,000 vehicles yearly and will start operating in early 2016, Chief Executive Officer Martin Winterkorn said yesterday. Capacity in China will rise to 4 million vehicles a year by 2018 as VW adds seven factories in the country, he said in a speech at the headquarters in Wolfsburg.
VW is counting on growth in China and the US, along with gains in the luxury-car segment with the Audi brand, to help offset declining demand in Europe amid a recession. Winterkorn said that VW is "feeling the headwinds" of a competitive global market, particularly in its home region.
"There's still enormous potential in China, but the market has slowed from double-digit growth to single digits, and that will remain so in the future," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. "The risk of over-dependence and overcapacity naturally rises with such a plan. It's up to VW to manage that."
The German manufacturer has a target of overtaking Toyota Motor Corp and General Motors Co to become the world's biggest carmaker by 2018. Volkswagen has automaking ventures with China FAW Group Corp and Shanghai-based SAIC Motor Corp. Deliveries by the Chinese partnerships last year totaled 2.61 million vehicles, accounting for 28 percent of the 9.35 million cars, sport-utility vehicles, vans and heavy trucks Volkswagen sold worldwide in 2012, its annual report said.
VW, which also owns the Porsche luxury-auto brand as well as the Skoda and Seat volume marques, will build at least 10 plants globally, including seven in China, Winterkorn said. That would raise the number of its factories in the country, now the world's biggest car market, to 19.
The company is looking at south or southwest China for a site, said Jochem Heizmann, head of VW's operations in the country.
GM is also a partner with SAIC, and the two are interested in buying ailing Chinese auto producers because they see the market as overdue for consolidation, people familiar with the companies' thinking said last month. Detroit-based GM, already the top foreign carmaker in China, has a target of increasing sales there by about 75 percent to 5 million vehicles by 2015, according to the people.
FAW said in early March that the government should order foreign automakers to contribute more to develop local brands.
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