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But most insiders doubt how Volkswagen can achieve such a robust expansion of more than 3 times, without a new factory in south China.

At the 7th China (Guangzhou) International Automobile Exhibition (Auto Guangzhou 2009), Winfried Vahland interviewed with the journalists and revealed that Volkswagen's south China plant construction scheme was still in suspense.

The automobile tycoon is believed to hit its production capacity goal of 2 million cars in China by 2018, on the strength of its existing four production bases in Shanghai, Changchun, Nanjing, and Chengdu, respectively. However, Volkswagen needs to consider the building of a new factory in south China as soon as its output and sales target is elevated temporarily.

Volkswagen has been reported to introduce a Spanish sports car brand, the Seat, into China, since the mid 2008. Domestic media even said that Volkswagen Group China had invited several Audi distributors to visit the Seat factory in Spain and asked for their opinion.

However, the German automaker has not made the final decision yet, in spite of its preliminary feasibility study and southern Chinese consumers' interest in this car model, Winfried Vahland said frankly. For the sake of a stable performance, Volkswagen should be in view of the risk caused by such an explosive auto sales growth in China.

An analyst pointed out the introduction of the Seat was likely related to Volkswagen's 2018 development strategy, so its establishment of a new plant in south China should be a signal for the debut of the Seat.

About one month ago, the auto giant declared its plan to create the second DSG (direct shift gearbox) plant in Dalian, Liaoning Province, northeast China, before 2012, and then its annual DSG output will be enlarged to over 500,000 units.

It is said to introduce some Chinese investors, including China FAW Group Corporation and Shanghai Automotive Industry Corporation (Group) (SAIC), into the possible construction, and related parties are discussing about the detailed scheme now.

(USD 1= CNY 6.83)

Source: www.beijingtimes.com.cn (November 25, 2009)

In addition to investments in property, plant and equipment, around E5.9 billion of the total represents capitalized development costs. This is the outcome of the investment planning for the years 2010 to 2012.

At E13.3 billion, the group is reportedly targeting the majority of its spending on property, plant and equipment in the automotive division for modernizing and expanding its product range.

The main emphasis is on new vehicles, successor models and model variants in almost all vehicle classes, based on the multi-brand modular matrix strategy.

In the area of powertrains, the group expects to introduce new engine generations. Automatic gearbox capacity is expected to be aligned with growing demand.

In addition, the company plans to invest E6.6 billion in cross-product technologies in the coming three years. Outside manufacturing, investments are planned mainly in the areas of development, quality assurance, genuine parts supply and IT.

The company has said that the construction of the new plant in North America is currently is progress, and the plant will start operations in 2011. Production at the new facilities in Russia and India is already being ramped up.

The joint venture companies in China are not consolidated and are therefore not included in the investments. These companies will reportedly invest a total of E4.4 billion between 2010 and 2012.

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Volkswagen expects to begin vehicle production in Osnabruck in 2011. According to present plans, this is expected to create over 1,000 jobs by 2014. Ongoing development contracts will continue in effect.

According to the company, some 200 specialists will already be needed from 2009 to start production and set up the vehicle project.

Volkswagen will hold final negotiations with the shareholders of the Karmann holding company and the administrator.

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Republication or redistribution, including by framing or similar means,
is expressly prohibited without prior written consent. Datamonitor shall 
not be liable for errors or delays in the content, or for any actions 
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