Volkswagen Considering Major New Plant in China

Just the Facts:

• Volkswagen is considering opening a new auto plant in China.
• The automaker wants to boost sales and raise market share in south China.
• VW, Audi and Skoda brands would be built at the new factory.

BEIJING — Volkswagen is considering setting up a new production base in Guangdong Province to boost sales and raise market share in south China, a Chinese newspaper has reported.

Some $5.5 billion will be invested in the new facility, due to be completed in 2013, which will make models under Volkswagen, Audi and Skoda brands, the Beijing Times said, citing Winfried Vahland, president of Volkswagen China Group. An official of Volkswagen China said she isn't aware of the matter.

Two factories with output capacity of 200,000 units each will be set up by VW's domestic ventures, the report added.

Since VW entered the Chinese market in 1984, it has performed sluggishly in south China, where Japanese rivals, including Toyota, Nissan and Honda, are dominant.

Last year, VW announced plans to boost sales and raise market share in south China, including the Guangxi Zhuang Autonomous Region and the provinces of Hainan, Zhejiang, Jiangxi and Fujian.

It wants to boost sales from 150,000 units now to 500,000 units in these areas within three to five years and to drive market share to 18 percent, up from the 2008 figure of 12 percent. The measures are part of VW's overall strategy in China to double sales to 2 million units by 2018.

Analysts said the setting up of the plants in south China would be necessary to meet the goal.

Inside Line says: VW looks to expand in an expanding market. — Vivian Jin, Correspondent