VW Plans to Double Output in China
In a further sign that car makers have high hopes for
the China market, Volkswagen AG and its Chinese partners
said today that they planned to double their manufacturing
capacity in China by 2007.
Volkswagen will invest 1 million euros in a new factory
in Changchun in northeast China, lifting capacity from
1.26 million this year to 2.28 million in 2007. Volkswagen's
main manufacturing facility is in Shanghai, and it plans
to raise capacity there by 75 percent to 700,000 units
by 2007.
The company has been facing falling market share in its
home European markets, and as the China market has grown,
has become more dependent on the China market. VW said
that sales have gone up by 62 percent in the first five
months of this year. Since it was one of the earliest
investors in the China market, it dominates about 40 percent
of the market. Auto sales in China surpassed 1 million
for the first time in 2002. As the China market for cars
and trucks has heated up, more players such as Volvo,
Visteon
and even new
makers have entered the market. General Motors is
investing US$240 million to double capacity at a Shanghai
plant to 100,000 cars a year.
These moves are sure to set the groundwork for a future
price war in the China market. So far, most makers are
planning to manufacture for sales in the China market.
Honda, however, is planning on exporting Accords made
at its Guangzhou facility for sale in Southeast Asia,
and later, Japan.
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