VW continues expansion in China despite economic slowdown

Article by Christian Andrei, on May 29, 2015

Volkswagen Group’s expansion in China will continue even as sales have slowed down this year. The automaker has recently opened a new assembly plant located in Changsha that cost 1.2 billion yuan ($194 million) to build. Located about 900km west of Shanghai, this plant will be operated by Shanghai Volkswagen Automotive Co., a 50-50 joint venture between Volkswagen and SAIC Motor Corp.

It is Shanghai VW's fifth assembly plant. Shanghai VW said that it will reach full capacity after a year. It will then be able to produce as many as 300,000 VW brand and Skoda units annually. In a statement, VW China boss Jochem Heizmann said that the Changsha plant is a “key step” in its Go South strategy.

He also said that this new plant will boost the quality of its supply chain as well as bring the company closer to its Chinese consumers. The first model that the Changsha plant will roll out is the VW Lavida compact sedan. This plant will soon produce other VW and Skoda models.

Over 4,000 jobs will be created to operate the plant. The nearby supplier park will add 4,000 more jobs. The automaker will add capacity even when sales in China have dropped due to an economic slowdown. During the first four months of 2015, the different brands of Volkswagen were able to deliver 1.19 million vehicles, standing for a 0.2% increase year on year.

Shanghai VW also has production facilities in the east China cities of Shanghai, Nanjing, and Yizheng and the northwest China city of Urumqi. In addition, Volkswagen has a joint venture with China FAW Group Corp., which currently runs three production locations. Two of these assembly plants are situated in the northeast China city of Changchun.

One is found in the southwest China city of Chengdu while one is in the south China city of Foshan. Construction is ongoing for FAW VW’s two new production facilities in the east China city of Qingdao and the north China city of Tianjin.

Shanghai VW builds Volkswagen and Skoda vehicles while FAW VW produces the Volkswagen and Audi models.

Topics: vw, china

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