SHANGHAI -- Volkswagen will not export significant numbers of cars from China until it is satisfied with the quality and price of locally supplied parts.
Bernd Leissner, Volkswagen group China chairman, denied reports that a new VW plant in Shanghai will be devoted to making cars for export.
"First we have to solve our problems here," Leissner said. "If the parts suppliers are not efficient enough, we can't export."
Only 35 percent to 40 percent of VW's suppliers in China are ready for export, he said.
"Quality is not only the quality of the production. Quality of process, service, liability are also important," he said.
In China, up to 75 percent of the cost of building a car is still materials. So locally made vehicles are too expensive for large-scale export because too many parts still have to be imported.
VW has a group of its experts working with suppliers in China to improve their quality, and the carmaker plans to add more people to the team.
VW exported 600 Polo sedans to Australia last year to test the market reaction to cars made in China. But that was a one-time experiment, VW executives say.
It is also exporting some Chinese-made parts back to Germany, such as wheels, but not in big numbers.
Exports mid-long term
VW has joint ventures in China with First Auto Works Group and Shanghai Automotive Industry Corp. Last year the joint ventures sold 698,391 cars in China, up from 492,940 in 2002.
The German automaker is building a new plant in Shanghai with capacity for 150,000 cars a year as part of its plans to have 1.6 million units of production capacity in China by 2008.
A few domestic Chinese automakers are already exporting. Chery Automobile Co. plans to export 10,000 sedans this year to the Middle East and South America.
Geely Holding Group plans to export 5,000 sedans, mostly to Mexico and the Middle East, but also to the US, if it can meet US clean-air standards.
Geely will begin producing a limited number of export-only Euro 4-compliant cars later this year. Harbin Hafei Motor Co. also plans to export sedans to Europe.