Volkswagen Ag and local Chinese partner FAW Group Corp have agreed to extend their cooperation deal for 25 years, with the German automaker aiming to consolidate its top position in the world’s largest auto market.
The German company is the largest carmaker in Europe and the second biggest in the world, behind only Japan’s Toyota. So, naturally VW is vying for the top position – and being one of the first foreign makes to construct local production facilities in China it sees that market as adamant to its global ambitions.
Although European, Asian and US automakers have seen the rise in importance of China – now the world’s largest single market and the second biggest for the luxury segment – but so far their ambitions have been toned down by the government’s regulation. Any foreign enterprise can only have 50% or less ownership in their mandatory Chinese joint ventures with local partners.
Volkswagen has the largest manufacturing print in China and has already worked successfully with FAW for over 20 years. The two companies said the agreement – covering the 2016 to 2041 period is needed to allow VW and FAW to develop their existing Research & Development plans and also focus on activities that advance their fuel-saving technologies.