VW targets 60% jump in Chinese vehicle production by 2018
Volkswagen AG plans to increase production 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, CEO Martin Winterkorn said Thursday. Capacity in China will rise to 4 million vehicles a year by 2018 from about 2.5 million currently.
"We will be building a minimum of 10 additional plants in the coming years, of which seven will be in China alone," Winterkorn said in a speech at Volkswagen's annual press conference at its headquarters in Wolfsburg, Germany.
China strategy
VW is counting on growth in China and the United States, along with gains in the luxury-car segment with the Audi brand, to help offset declining demand in Europe amid a recession. The strategy for China outlined Thursday would increase the number of Volkswagen's auto plants in the country to 19.
Profit, revenue and deliveries will probably rise in 2014, with demand growing in all regions, Volkswagen said.
Earnings before interest and taxes rose 2 percent to $14.9 billion (93 billion yuan) in 2012, VW said last month. The contribution from Chinese operations jumped 42 percent to 30 billion yuan, the carmaker said.
'Enormous potential'
"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 overdependence and overcapacity naturally rises with such a plan. It's up to VW to manage that."
VW outlined an investment program for its automotive division in November totaling 403 billion yuan through 2015, shortening the calendar from the usual five years because of unpredictability in the European car market.
The company's Chinese joint ventures, which are not consolidated, will spend an additional 79 billion yuan in the period.
"We will be building a minimum of 10 additional plants in the coming years, of which seven will be in China alone," Winterkorn said in a speech at Volkswagen's annual press conference at its headquarters in Wolfsburg, Germany.
China strategy
VW is counting on growth in China and the United States, along with gains in the luxury-car segment with the Audi brand, to help offset declining demand in Europe amid a recession. The strategy for China outlined Thursday would increase the number of Volkswagen's auto plants in the country to 19.
Profit, revenue and deliveries will probably rise in 2014, with demand growing in all regions, Volkswagen said.
Earnings before interest and taxes rose 2 percent to $14.9 billion (93 billion yuan) in 2012, VW said last month. The contribution from Chinese operations jumped 42 percent to 30 billion yuan, the carmaker said.
'Enormous potential'
"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 overdependence and overcapacity naturally rises with such a plan. It's up to VW to manage that."
VW outlined an investment program for its automotive division in November totaling 403 billion yuan through 2015, shortening the calendar from the usual five years because of unpredictability in the European car market.
The company's Chinese joint ventures, which are not consolidated, will spend an additional 79 billion yuan in the period.
