Volkswagen AG aims to increase localization rates in China to over 80 pct by 2008 from 63 pct last year, the automaker's China chief executive Winfried Vahland said.
Vahland said Volkswagen will open an engine production plant in Loutang in the first half of next year after having opened another engine assembly line in the northeastern city of Dalian early this year.
The Loutang plant, near Shanghai, will be operated by Shanghai Volkswagen, Volkswagen's joint venture with Shanghai Automotive Industry Corp.
The Dalian facility is operated by Volkswagen's other joint venture in China, FAW-VW, which it established with First Automotive Works.
A VW spokesperson could not confirm the capacity or investment details for the new plants.
Vahland said Volkswagen's short-term aim is to develop efficient engines in line with China's progress towards fuel efficiency and better emission standards.
'China, along with countries like Brazil, Russia and Mexico, is gradually approaching European emission standards... Our short-term focus is on the enhancement of fossil-based gasoline and diesel engines,' he said.
Vahland added that Volkswagen will next year introduce a second generation version of 1.8-2.0 litre engines for compact and midsize vehicles based on European technology and standards.
While Volkswagen is raising its local content, the automaker has decided not to raise car production capacity from the current level of 900,000 units a year, the company spokesperson told XFN-Asia on the sidelines of the forum.
'There is overcapacity in the Chinese market, which is why Volkswagen has decided to stop adding new capacity,' he said.
The spokesperson added that price cuts are likely to continue in China as automakers look to gain market share.
'There will be pressure on prices and there will be some price cuts that affect the whole market, but I do not envisage a major price war,' he said.
Despite overcapacity concerns, Volkswagen said it will launch 12 to 14 new models in China by 2010.
The automaker had previously said it would introduce from eight to 10 new cars by 2008 as part of its 'Olympic program.'
The launch of new vehicles, such as the Sagitar, have been credited for Volkswagen's recent turnaround, which saw its sales in China rise 29.5 pct in the first eight months of 2006 to 459,299 vehicles.
The automaker said it expects sales in China to reach 665,000 units this year.
The company spokesperson, who declined to be named, said he expects China's automarket to achieve 8-10 pct growth annually over the next five years.
'Volkswagen expects to grow with the market and keep our market share,' he added.
Volkswagen has a market share of around 17.5 pct in China.
According to the China Association of Automobile Manufacturers, passenger vehicle sales in the first half rose 46.9 pct to 1.8 mln units.
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Source:佚名