Volkswagen Eyes Full Control of Chinese Joint Ventures

Strategic Insights -

As China's entry into the World Trade Organisation (WTO) looms, Volkswagen is planning to take full control of its jointly held car plants in China. Erich Schmitt, a board member of Volkswagen unit Audi and in charge of China operations, has stated that the company will discuss the option of buying out its state-owned Chinese partners once WTO regulations allow it. This move is expected to give Volkswagen greater flexibility in its choice of suppliers and improve the quality of its locally made cars.

Key Takeaways:

  • Volkswagen plans to take full control of its jointly held car plants in China following China's entry into the WTO.
  • The company will discuss the option of buying out its state-owned Chinese partners once WTO regulations allow it.
  • Volkswagen needs greater flexibility in its choice of suppliers to improve the quality of its locally made cars.
  • Chinese parts makers have yet to reach international standards, posing a challenge for Volkswagen.
  • Volkswagen has pledged to spend about DM3bn (Pounds 900m) in the next few years to modernise its operations in China.
  • The company's Chinese passenger car market share is over 50 percent.
  • Volkswagen's Chinese joint ventures have been in operation since 1978.
  • Local content rules have forced foreign carmakers to source parts from Chinese manufacturers.
  • China's entry into the WTO may lead to a loss of market share for Volkswagen due to affordable imports.

Statistics:

  • Volkswagen's plans to spend about DM3bn (Pounds 900m) in the next few years to modernise its operations in China.
  • China's market for privately owned cars is expected to exceed one million in the medium term.
  • Volkswagen's Chinese passenger car market share is over 50 percent.
  • Volkswagen has been operating in China since 1978.
  • Chinese parts makers have yet to reach international standards, posing a challenge for Volkswagen.

Sources:

  • "Volkswagen, Europe's largest carmaker" (no date mentioned)
  • Erich Schmitt, a board member of Volkswagen unit Audi (no date mentioned)
  • Shanghai Volkswagen (no date mentioned)
  • World Trade Organisation (no date mentioned)
  • Chinese passenger car market (no date mentioned)
  • Volkswagen's operations in China (no date mentioned)