Manufacturing News

VW upbeat on China, targets SUV push and more outlays at joint ventures

Volkswagen AG is optimistic that its positive sales trend in the two previous quarters will continue in China, the company's China chief Jochem Heizmann said on Sunday.

Volkswagen plans to invest 29.17 billion yuan ($4.49 billion) with its joint venture partners in China this year, while the expansion of its share of the SUV and new energy vehicle markets will be a focus over the next several years, Heizmann told reporters ahead of the Beijing auto show beginning on Monday.

Volkswagen is using the Beijing auto show to introduce the T-Prime Concept GTE, a full-size SUV with a plug-in hybrid powertrain and all-wheel drive. The concept showcases the future styling direction of VW's crossovers and SUVs, and may preview the next Touareg.

VW, whose China sales fell 3.4 percent last year to 3.5 million cars and light trucks, has lagged in the country's SUV boom with relatively few locally produced models.

But it plans to change that with launches of 10 locally made VW, Audi and Skoda SUV models in the years ahead.

"There is an SUV offensive on the way," Heizmann said.

"It will begin this year with a B segment SUV," he added, declining to give details on which joint venture or brand would produce that model. B segment refers to small cars.

On new energy vehicles, Volkswagen estimates that 2 million will be sold in China by 2020, in line with the government's target, with the German carmaker selling a few hundred thousand a year.

VW aims to build 15 new plug-in hybrids or electric vehicles in China in the next three to four years and is taking steps to boost development of online connectivity in its models, Heizmann said at an evening reception on Sunday, reiterating the plans may entail hiring another 30,000 people by the end of the decade.

The group has set up a so-called future lab in China to fuse digitalization experts with designers and enhance work on how people interact with their cars. The effort is also part of VW's push to reposition itself in the wake of the diesel emissions scandal.

"In China, the future is on display now," the executive said. "VW is building a new world of mobility."

Heizmann also said VW is prepared for any recalls in China over diesel-related issues, referring to the emissions test-rigging scandal last year. The company, pressed by U.S. regulators, admitted to improperly modifing cars to skirt emissions tests and rules.

The company has been in talks with regulators globally on restitution over the emissions violations. In China, the issue only affected roughly 2,000 cars.

Fallout from the scandal contributed to Volkswagen narrowly losing its crown as the top foreign automaker in China to General Motors Co in 2015, according to data from the China Automobile Makers Association.

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