Volkswagen set to build new plant in south China image

Later this month, Volkswagen China, along with its joint ventures FAW VW and Shanghai VW, will release their “South Strategy” at the upcoming 2009 Guangzhou auto show, as the most important part of their “2018 Strategy,” said today, citing a user’s blog.

A source revealed that the key part of Volkswagen China’s “South Strategy,” which has been discussed for three years, to build a plant in southern China, in addition to the current plants in northeastern city of Changchun and eastern city of Shanghai.

“To build a plant in South China has been determined. Volkswagen plans to announce its plans at Guangzhou auto show by Fan Ande, CEO of Volkswagen Group China,” a source in Volkswagen said. “As the layout of our production has impacted on us a lot in the South China market, we are determined to build a plant there.”

Volkswagen has always seen the North and East China as its production bases in the country, while Toyota has joint plants in Guangzhou, Changchun and Chengdu. Other Japanese auto manufacturers such as Nissan and Honda also made great progress in China by entering into the South.

FAW VW and Shanghai VW haven’t developed broad dealerships networks and customer bases in South China, where VW only accounts for 5% market share. The region’s new car sales account for 35% of China’s overall new car sales. In Guangzhou market, Japanese cars account for 55.2%.

Analysts said that Volkswagen’s plant in South China may be located in Dongguan Industry Park, Guangdong province, although most information on this project will not be disclosed until two weeks later.