Manufacturing News

Foreign automakers boost local production capacity

Expanding production bases in China has become a trend for foreign auto companies, analysts said, after German car manufacturer Volkswagen announced yesterday that it plans to build a new plant in China's western region to gain more market share.

"The details about the plan for a new plant in Xinjiang will be announced by the headquarters in Germany," Wen Jiyong, a public relations staff with Volkswagen China, told the Global Times yesterday, without providing further details. The new factory in Xinjiang may cost the company less than 300 million euros ($394.2 million), with an annual capacity of about 50,000 vehicles, Reuters reported yesterday citing an insider from the company.

"Building a new plant in the western region is part of the company's strategy to expand production bases to strengthen its dominance in the Chinese auto market," Zeng Zhiling, an auto industry analyst with Shanghai-based automotive consultancy LMC Automotive, told the Global Times yesterday.

Volkswagen is building factories in Foshan, Dalian, Nanjing, Chengdu and Ningbo to increase production in eastern China. The automaker has a vast distribution network in the country as "Chinese customers favor Volkswagen cars due to their good quality," Zeng said.

Establishing a plant in Xinjiang will help the company to reduce manufacturing cost due to abundant energy resources and lower manpower cost, but the extreme weather conditions will also pose a technological challenge for the assembly of vehicles, Li Yuheng, an auto analyst with the CIC Industry Research Center, told the Global Times yesterday.

Almost all foreign automakers are hoping to grasp the opportunities presented by the Chinese auto market, said Li.

Shanghai General Motors Co, a joint venture between Shanghai Automotive Industry Corporation (Group) and General Motors Co, is also boosting its local production. The company plans to invest 7 billion yuan to build a production base in Wuhan, capital of Central China's Hubei Province, with an annual production capacity of 300,000 units.

"Shanghai GM hopes to increase sales in China by increasing production and upgrading technology, and the company might develop new energy vehicles in the coming few years," Li said.

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