Volkswagen sets China as Asian export base By Gong Zhengzheng (China Daily) Updated: 2004-06-14 09:00
German auto giant Volkswagen said it expects China to remain its backbone and
to become its exports base in the booming Asia-Pacific car market by 2008.
The expectations are indicated by targets for Volkswagen's annual unit sales
in the Asia-Pacific region and annual output in China in the next five years.
Volkswagen aims to at least double its sales in the region in the next five
years from 807,000 cars last year, said Hans-Dieter Poetsch, Volkswagen's chief
financial officer.
Volkswagen, the biggest carmaker in China, said it will strive to produce
annually more than 1.6 million cars in China by 2008, up from the 800,000 units
anticipated this year.
The carmaker's sales in China surged by 36 per cent to 697,000 cars last
year, amounting to 30.8 per cent of the domestic car market.
"We believe the growth trend in the Asia-Pacific area car market will
continue. But persistent economic hardship, soaring oil prices, fluctuations in
currency exchange rates and other uncertainties will affect the auto industry in
the region," Poetsch said.
Volkswagen's auto production joint venture in Shanghai started to export Polo
notchbacks to Australia at the end of last year.
China expects to export passenger vehicles in large volumes by 2006 as
quality and prices of domestically-made vehicles reach international levels.
China exported 125,100 vehicles last year, including 2,849 cars.
Currently, car prices in China are much higher than in developed markets.
Poetsch said Volkswagen was aiming to double its sales revenue and profits in
the Asia-Pacific region in the next five years.
"China is our biggest overseas market, but it will not be easy to maintain
our market share," said Folker Weissgerber, the Volkswagen board member in
charge of Chinese operations.
Volkswagen faces great challenges from US and Japanese rivals, such as
General Motors, Ford, Toyota and Honda, whose sales in China are growing
rapidly.
"To maintain our leadership, we will speed up efforts to develop new
products, improve levels from our suppliers and enhance local content
proportions in China," Weissgerber said.
Volkswagen will start to produce Touran multi-purpose vehicles at its joint
venture in Shanghai later this year.
Its other car joint venture in Northeast China's Jilin Province will start to
produce the new Audi A6 sedan and Caddy wagon next year.
"We are studying the possibility of producing our other brands, such as Skoda
Octavia, in China," Weissgerber said.
Volkswagen remains optimistic about China's car market, although car sales
here are slowing down.
Weissgerber predicted that China's passenger car market will grow to 8.5
million units a year by 2008, up from 2.24 million units last year.
Sales of China-made passenger cars declined by 2.72 per cent in April from
the previous month.
"We will not take hasty action on the temporary market slow down...We are
seeking stable values in China," said Bernd Leissner, president of Volkswagen
Group China.
Many carmakers in China have been involved in price wars this year, resulting
in customers delaying buying vehicles, in expectation of price cuts.
Volkswagen plans to invest 60 billion yuan (US$7.2 billion) over the next
five years in China.
