VW: Huge funding in the future in China

German carmaker Volkswagen Group plans massive investment in China over the next five years to maintain its three-decade-long leadership in the world's biggest vehicle market.

Jochem Heizmann, president and CEO of Volkswagen Group China, told China Daily on Feb 12 that the company plans to invest 22 billion euros ($25 billion) between 2015 and 2019 in China, its biggest single market.

The figure is up from 18 billion euros the dominant carmaker in China previously planned for 2014 to 2018.

The newly charted investment will be put into an array of areas ranging from new production capacity and new products to research and development, Heizmann said.

He said Volkswagen's annual production capacity will grow to 5 million cars by 2019, up from roughly 3.1 million units in 2013.

"It is not only volume, it is also qualitative growth," he stressed.

The group's China sales rose by 12.4 percent to 3.68 million units in 2014, accounting for a staggering 37 percent of its global deliveries.

The sales also accounted for 20.5 percent of China's entire passenger vehicle market last year, according to the company.

"We aim to hold the market share or a little bit more in 2015," Heizmann said without giving a specific sales number. "We are also preparing for the future."

He predicted that the entire passenger vehicle market in China will grow 5 to 8 percent this year from 2014. Last year, overall passenger vehicle sales in China rose by 13 percent to 18.39 million units, according to the industry data.

The carmaker, together with its affiliate brands including Audi and Skoda, will offer more than 30 new products this year in China, both locally made and imported, he said.

As one of the earliest foreign carmakers with local production, the group now has 28 plants to produce vehicles and components in a slew of Chinese cities.

The cities include Changchun in Northeast China, Shanghai and Ningbo in the east, Foshan in the south, Chengdu in the southwest and Urumqi in northwestern China.

Its new car plant in Changsha, Hunan province, will start producing passenger cars this year for Shanghai Volkswagen.

"There will be 4,000 highly qualified people (working) in the Changsha plant, and this is combined with a highly qualified program," said Heizmann.

Many of the staff members at the Changsha plant were hired more than a year ago.

Shanghai Volkswagen trained and qualified workers including the management team in existing plants in Shanghai.

It is a part of the group's expert education and practical training in plants apart from theoretical education in schools.

"Before reaching success in the market, we have to be the top employer. We need the best people," said the CEO.

Volkswagen China has used a 50 million yuan ($8.2 million) charity to support Chinese youth, including helping football training at middle schools and promoting the use of child safety seats.

Preparations including construction for yet another plant, in Qing dao of Shandong province, is ongoing for FAW-Volkswagen. It is scheduled to open in 2017.

The giant German manufacturer's joint venture with FAW Group makes Volkswagen and Audi cars. Its other tie-up, with SAIC Motor Corp, produces Volkswagen and Skoda models.

Along with expansion is a top priority for its ongoing commitment to lower emissions, the CEO said.

"All environmental issues are so important (in China). What we are doing on the product side is all about that. We call it the efficiency strategy."

The company's efficiency strategy is designed to not only promote electric mobility but also reduce fuel consumption in combustion-engine cars through high performance in engines and gearboxes, he added.

The CEO also said he expects the carmaker to sell "six-digit numbers" of plug-in hybrid and purely electric vehicles a year in China by 2020.

To promote clean mobility and alleviate pollution in urban areas, Chinese authorities now exempt plug-in hybrid and purely electric vehicles as well as fuel-cell battery cars from the nation's 10 percent auto sales tax.

Many other foreign and indigenous automobile companies such as Daimler, BMW, BYD and Chery are also keen to introduce electric models at competitive Chinese market, analysts say.