Volkswagen sets China as Asian export base
By Gong Zhengzheng (China Daily)
Updated: 2004-06-14 09:00

German auto giant Volkswagen said it expects China to remain its backbone and to become its exports base in the booming Asia-Pacific car market by 2008.

The expectations are indicated by targets for Volkswagen's annual unit sales in the Asia-Pacific region and annual output in China in the next five years.

Volkswagen aims to at least double its sales in the region in the next five years from 807,000 cars last year, said Hans-Dieter Poetsch, Volkswagen's chief financial officer.

Volkswagen, the biggest carmaker in China, said it will strive to produce annually more than 1.6 million cars in China by 2008, up from the 800,000 units anticipated this year.

The carmaker's sales in China surged by 36 per cent to 697,000 cars last year, amounting to 30.8 per cent of the domestic car market.

"We believe the growth trend in the Asia-Pacific area car market will continue. But persistent economic hardship, soaring oil prices, fluctuations in currency exchange rates and other uncertainties will affect the auto industry in the region," Poetsch said.

Volkswagen's auto production joint venture in Shanghai started to export Polo notchbacks to Australia at the end of last year.

China expects to export passenger vehicles in large volumes by 2006 as quality and prices of domestically-made vehicles reach international levels.

China exported 125,100 vehicles last year, including 2,849 cars.

Currently, car prices in China are much higher than in developed markets.

Poetsch said Volkswagen was aiming to double its sales revenue and profits in the Asia-Pacific region in the next five years.

"China is our biggest overseas market, but it will not be easy to maintain our market share," said Folker Weissgerber, the Volkswagen board member in charge of Chinese operations.

Volkswagen faces great challenges from US and Japanese rivals, such as General Motors, Ford, Toyota and Honda, whose sales in China are growing rapidly.

"To maintain our leadership, we will speed up efforts to develop new products, improve levels from our suppliers and enhance local content proportions in China," Weissgerber said.

Volkswagen will start to produce Touran multi-purpose vehicles at its joint venture in Shanghai later this year.

Its other car joint venture in Northeast China's Jilin Province will start to produce the new Audi A6 sedan and Caddy wagon next year.

"We are studying the possibility of producing our other brands, such as Skoda Octavia, in China," Weissgerber said.

Volkswagen remains optimistic about China's car market, although car sales here are slowing down.

Weissgerber predicted that China's passenger car market will grow to 8.5 million units a year by 2008, up from 2.24 million units last year.

Sales of China-made passenger cars declined by 2.72 per cent in April from the previous month.

"We will not take hasty action on the temporary market slow down...We are seeking stable values in China," said Bernd Leissner, president of Volkswagen Group China.

Many carmakers in China have been involved in price wars this year, resulting in customers delaying buying vehicles, in expectation of price cuts.

Volkswagen plans to invest 60 billion yuan (US$7.2 billion) over the next five years in China.

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