Volkswagen to extend its joint venture with FAW Group for 25 more years

Article by Christian Andrei, on November 30, 2012

After the conclusion that none of the parties were guilty of infringing technology patents, Volkswagen has entered a deal with China's FAW Group to extend their joint venture for 25 years more. In a statement, Volkswagen said that both companies have agreed to extend their partnership beyond 2016, when the existing contract expires.

The venture’s product portfolio will be expanded and they will also be closely cooperating to develop new business activities. The deal was inked after a meeting attended by VW CEO Martin Winterkorn and FAW Group Chairman Xu Jianyi. They reportedly talked about engine and gear box patents and they determined that no rights were violated.

Last July, German newspaper Handelsblatt reported that FAW had unlawfully copied engine technology and gathered offers from suppliers for major components to a VW gearbox. The German newspaper didn’t indicate the source of this information. VW spokesman Christoph Adomat said that it was examining the issue.

The VW Group considers the Chinese market to be the key for it to achieve its target of beating General Motors and Toyota and taking the title of the world's biggest automaker by 2018. Earlier this month, VW said that Group sales in the automaker's largest single market increased by 19.6% to 2.26 million through October. Volkswagen, which builds Jetta and Audi A6L sedans with FAW, has promised to invest 9.8 billion euros ($12.7 billion) in China through 2015.

Topics: vw, joint venture

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