VW plans China fightback

Wolfsburg. Volkswagen group is reviewing its auto business in China following a drop in sales figures and growing competition from new competitors.

Chief executive officer Bernd Pischetsrieder's hint that the Czech subsidiary Skoda might enter the market in 2005 has already started an internal fight for resources.

Automobilwoche has been told by insiders that VW board member Folker Weissgerber, who is responsible for China business, plans to expand its design engineering sector in China to build cars that are more to Chinese customers' taste.

Volkswagen has sent experts from VW Consulting to its joint venture plant with in Shanghai. They are currently examining production and sales processes to increase the plant's competitiveness.

VW now wants to purchase more components from Chinese suppliers sooner than planned for the Touran compact van, which will also be produced at the company's Shanghai plant from the end of 2004.

Currently Volkswagen is negotiating further price reductions with its suppliers in China and announced last week that vehicles made in China would be between 2 and 11 percent cheaper.

The official reason for this is as a 'thank you' for having been appointed partner for the 2008 Olympic Games in Beijing.

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