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Volkswagen JV Aims to More than Double Sales
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German carmaker Volkswagen's joint venture with China's First Automotive Works Corp (FAW) plans to more than double annual sales by 2011 from last year.


The venture, FAW VW, told China Daily it aims to sell 600,000 cars in 2011, up from 277,300 units in 2005.


The 2011 sales will include 450,000 Volkswagen-branded cars and 150,000 units under the Audi nameplate, the venture said. Audi is a wholly owned subsidiary of Volkswagen.


FAW VW, based in Changchun, capital of Northeast China's Jilin Province, expects to grab one-tenth of the domestic passenger car market by then, it said.


The company's ambitious target comes as its sales and the overall domestic passenger car market picked up pace after a slow couple of years.


In the first eight months of this year, FAW VW's sales jumped by one-fourth year-on-year to 227,676 units, including 175,585 Volkswagen cars and 52,091 Audi vehicles.


These sales made it the No 3 single car producer in China after US auto giant General Motors' venture with Shanghai Automotive Industry Corp and Volkswagen's other venture with the Shanghai auto group.


For the full year, FAW VW said it expects to sell 352,000 vehicles 276,000 units under the Volkswagen brand and 76,000 Audi cars.


According to industry statistics, sales of all made-in-China cars surged by 31.78 percent to 3.23 million units from January to August from a year earlier. The growth rate was up from 15 percent last year.


FAW VW now makes Volkswagen's Jetta, Bora, Golf, Sagitar and Caddy as well as the Audi A6 and A4. The company's Audi business unit also markets imported Audi vehicles.


The venture said it will make full use of the Volkswagen Group's product platforms to further extend its line-up.


"We will launch at least one new model every year to meet growing market demand," said An Tiecheng, president of FAW VW.


According to the Volkswagen Group's China market positioning strategy announced earlier this year, FAW VW's products target customers wanting the latest cutting-edge German technology.


To differentiate itself from FAW VW, Volkswagen's venture in Shanghai produces cars with a strong lifestyle image. The Shanghai venture's existing products include the Santana, Passat, Polo, Touran and Gol. It will also start making cars with Skoda, Volkswagen's Czech unit.


"FAW VW will further increase spare parts localization of its vehicles and improve productivity to cut costs," An said.


He said the venture has transferred 1,000 non-manufacturing employees into the manufacturing area this year. It has a total staff of 10,000.


The Volkswagen Group plans to cut operational costs in China by 40 percent by 2008, according to a plan revealed last year.


FAW VW is also overhauling its sales networks to boost sales.


It has reshuffled its nine regional markets into five "strategic business units." These business units are responsible for sales management, market promotion, after-sales services, financial control and training support for the venture's dealerships.


The venture now has an annual production capacity of 600,000 vehicles. FAW, Volkswagen and Audi control 60, 30 and 10 percent stakes in the venture.


These parent firms have invested a total of 23.4 billion yuan (US$2.95 billion) in the venture, which was set up in 1991.


(China Daily September 21, 2006)


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