Volkswagen Expands Footprint in Chinese Market

FAW-Volkswagen announced the opening of a new production base in Qingdao, east China’s Shandong Province, on May 28, marking an expansion of the leading European automaker in the world’s biggest auto market.

FAW-Volkswagen Automotive Co. Ltd., a joint venture between China’s FAW Group and the German Volkswagen Group, said the 1.1-million-square-meter base has a total ca- pacity of producing 300,000 vehicles every year. Construction of the base began in July 2015, with investments totaling approxi- mately 10 billion yuan ($1.58 billion). The joint venture now has a total of fi ve produc- tion bases.

Liu Yigong, FAW-Volkswagen General Manager, said the new base in Qingdao will bring 5 billion yuan ($777 million) in invest- ment from the company’s suppliers. It will also create 3,000 jobs locally, while its suppli- ers will create up to 10,000 more jobs. Volkswagen set up its fi rst joint venture in Shanghai in 1985 with SAIC Motor. As the Chinese economy developed and opened up, the company established a strong foot- hold in the Chinese auto market and has been expanding its footprint ever since. It now has three ventures following the es- tablishment of a second one with FAW in Changchun, northeast China’s Jilin Province, in 1991, and a third with Anhui Jianghuai Automobile Co. Ltd. in Hefei, east China’s Anhui Province, in 2017.

In addition to expanding production and introducing new techniques, Volkswagen has also focused on developing new energy vehicles and intelligent driving. The company and its joint-venture partners announced in April that they will invest 15 billion euros ($18.3 billion) in developing new energy and self-driving vehicles by 2020. It also plans to roll out 15 new car models in China by 2020 and launch 40 new energy vehicle models for the Chinese market by the end of 2025. “As the world’s biggest automotive mar- ket, China plays a prominent role across all group brands. The strong bond with our joint ventures and business partners will remain,” said Herbert Diess, CEO of Volkswagen, in April. The company will start local production of battery-electric cars in at least six factories by 2021 in China, he added.

Volkswagen has seen high-speed growth in the Chinese market over the past few years. In 2017, it delivered 4.18 million ve- hicles to the Chinese mainland and Hong Kong market, up 5.1 percent year on year.