Manufacturing News

VW, FAW move forward with Tianjin assembly plant despite slowdown

Volkswagen AG and joint venture partner China FAW Group will begin construction in Tianjin next week on a plant that will produce up to 300,000 cars annually.

The factory will be completed by 2018, said a company spokesman in Beijing.

The spokesman declined to put a value on the project, but state-owned newspaper China Daily said an official at the joint venture estimated the investment at 19.5 billion yuan ($3 billion).

Volkswagen previously had disclosed plans to build a factory in the port city of Tianjin, without providing details.

The automaker has maintained its planned expansion in China despite a sluggish economy that is growing at its slowest rate in 25 years.

The spokesman said the company plans an annual production capacity of five million units by 2020. Last year, Volkswagen said it would hit that mark by 2019.

"Generally, we stay on our investment plans, with some modifications of course which is normal and which will always be done," Volkswagen China chief Jochem Heizmann told reporters in Beijing last month. "We will use these capacities and have some more flexibility to react."

Heizmann said ahead of last month's Beijing auto show that the company will invest 4 billion euros ($4.5 billion) with its joint venture partners in China this year.

In addition to FAW-VW, the company also makes passenger cars through a separate joint venture with SAIC Motor Corp.

In the first three months of 2016, Volkswagen deliveries in China grew 6.4 percent year on year. The company bounced back from a 3.4 percent sales decline in 2015.

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