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VW increases China production as Europe demand weakens

German carmaker, Volkswagen, is set to double production in China over the next 5 years.

Volkswagen AG, Europe’s largest carmaker, is planning to offset waning demand at home with an ambitious expansion in an emerging market. The German auto giant announced its target of doubling capacity in China to more than four million vehicles per year by 2018. VW is betting sales in China, already its largest market, will allow it to overtake Toyota Motor Corp as global leader for car sales.

Group CEO Martin Winterkorn hopes to add “a minimum” of 10 additional plants in the coming years, of which seven will be in China alone, bringing the national total to 19 plants. Winterkorn added that growth in the US and China, alongside gains in the luxury segment, is key to offsetting softening demand in Europe, where economies may stagnate for the foreseeable future.

VW’s earnings before interest and tax rose 2% to $14.9 billion in 2012, fuelled in part by a healthy 42% increase in earnings from its Chinese operations. VW also hopes to invest 403bn Yuan ($64.8bn) in China between now and 2015, seeing the country as having the largest potential for growth.

The group delivered around 9.1 million vehicles in total last year, although its operating profits fell by 4.1% to $4.7bn as dealerships slashed prices to lure European buyers.

Tags: China, Corporate News, OEM and automotive, Volkswagen

Published 22nd March, 2013

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