Volkswagen Group to build a new plant in China, extend partnership with FAW

April 25: The Chinese Premier Wen Jiabao and the Federal Chancellor Dr. Angela Merkel yesterday visited the Volkswagen plant in Wolfsburg. In the presence of the two heads of government, Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, and representatives of the Chinese partner SAIC Motor Corporation signed a contract to build a new plant in Urumqi, Western China. Furthermore, the Volkswagen Group and China First Automobile Group Corp (FAW) agreed on plans to extend the FAW-Volkswagen joint venture by a further 25 years.

“A 30-year success story unites Volkswagen and China. As a pioneer of the Chinese automotive industry, we gave important momentum to China’s industrial development and to German-Sino economic relations. Together with our partners we will now carry this pioneering spirit into Western China as well,” Winterkorn said on the occasion of the visit to Wolfsburg.

Volkswagen and SAIC Motor Corporation of Shanghai agreed to build a vehicle manufacturing plant in Urumqi, the capital of Xinjiang province. A total of approximately 170 million euros will be invested in the new plant. From 2015 this plant will produce up to 50,000 vehicles per year. In parallel, Volkswagen will help automotive suppliers to settle in the vicinity and will be setting up its own training centre. “Going forward, we expect strong growth in China’s rural regions. The west of the country plays a special role in this context. Together with its partners, Volkswagen is looking to extend its presence there in the long term”, Dr. Karl-Thomas Neumann, president and CEO of Volkswagen Group China (VGC), said. “Our ‘go west’ strategy marks the beginning of a further chapter in our success story in China”, Neumann added.

Furthermore, Winterkorn and representatives of the partner FAW signed a letter of intent regarding the early extension of the FAW-Volkswagen joint venture by a further 25 years. The joint venture was set up in 1991 and today operates vehicle and component plants in Changchun, Chengdu and Dalian. Following more than 20 years of successful cooperation, Volkswagen and FAW intend to further expand their strategic partnership going forward, and will be concentrating in particular on projects concerning electro-mobility and new, innovative product developments and services in the financial services sector. The People’s Republic of China is the Volkswagen Group’s largest sales market. Volkswagen sold 2.26 million vehicles in China in 2011, with deliveries increasing by 15.6 percent to over 633,000 units in the first three months of this year. The two joint ventures Shanghai-Volkswagen and FAW-Volkswagen with a total workforce of some 50,000 produce vehicles, gearboxes, chassis and engines at ten plants. The Group intends to continue on this successful course in future: The two Chinese joint ventures will be significantly expanding their commitment, investing a total of €14 billion by 2016. The focus will lie on developing new products and expanding environmentally-friendly production capacity.

The photograph shows Chancellor Dr. Angela Merkel, Prof. Dr. Martin Winterkorn and Chinese Premier Wen Jiabao.