Just after reporting that Volkswagen will be increase production and sales in the United States, Europe’s largest car maker has announced they are planning to build 4 million cars in the world’s largest car market, China.
Volkswagen are planning to double the production figures by the year 2018 in the country according to the Head of Volkswagen’s Chinese operations.
Volkswagen currently has two joint ventures in China. They will be investing a total of €14 billion by the year 2016. Annual capacity is expected to hit nearly 3 million as soon as 2013. Volkswagen’s Joint ventures with FAW and Shanghai Automotive (SAIC) performed wonders last year, increasing output by 15 per cent which resulted in a total of 2.20 million vehicles produced. That figure represents more than a quarter of sales
Volkswagen’s global sales which reached 8.5 million.
At the moment Volkswagen have plants based in Changchun, Chengdu and Nanjing. They are already planning expansions on all to help deal with future demand. The cities of Yizheng, Foshan and Ningbo will get newly built Volkswagen factories. Controversially Volkswagen is also planning build a new factory in Urumqi, a city based over in Western China. There are cultural differences between residents and tensions are quite high at present.
Volkswagen has nominated Heizmann to overlook Volkswagen’s operations Chinese operations. Heizmann are a production expert company. This move was made as Volkswagen has completely reshuffled their management scheme in China.
Volkswagen realise that if they are to reach their 2018 target of becoming the world’s number one car manufacturer, they must start improving operations in the world’s largest car market. Their luxury brand Audi are currently performing wonders in China, being the number one car producer in the country for a number of years.
Previously Volkswagen had hoped to achieve a target of three million vehicles by 2014. This is still on course according to the company.
In 2011 Volkswagen managed to sell 2.3 million vehicles in the country. An operating profit of €2.6 billion was also reported. China is now Volkswagen’s main market ahead of the company’s home country of Germany. This is also the same case for Volkswagen’s luxury brand Audi whoare also a German based company.
The change of Management strategy for China is sure to have a huge impact on Volkswagen’s success in the country.