BEIJING -- Volkswagen AGs model introductions in the next year in China will stay on track despite a 22 percent investment cut, a company spokesman said.
But the German automakers aggressive expansion plans for China may be scaled back, suggested Kai Grueber, spokesman for Volkswagen China Group.
Volkswagen is in discussion with its joint-venture partners about how to implement concretely the investment reduction, he said.
VW said it would cut investment in China to 2.10 billion euros over the next two years, or $2.73 billion at current exchange rates. Previously, it planned to invest $3.50 billion.
VW still plans to introduce the Caddy minivan in China at its joint venture with First Auto Works in early 2005. A new Audi A6, also made at FAW-VW, will debut in 2005.
As recently as June, Bernd Leissner, chairman of Volkswagen Group China, said that VW would have 1.5 to 1.6 million units in production capacity in China between its two joint ventures by 2008. Current capacity is 900,000 units.
But a marketwide sales slump that began in May has worsened, prompting VW to be more cautious.
Volkswagen will further follow its strategy to expand production capacity step by step in line with the market development, Grueber said.
The first foreign automaker to set up a passenger-car joint venture in China, VW once dominated the market with more than 70 percent share. By October, that share had fallen to 25 percent by VWs own reckoning.
VWs strategic aim is to have 30 percent market share, Executive Vice President Barthel Schroeder said at the AutoChina show in Beijing in June.
The cutbacks dont necessarily mean that VW has abandoned that target, says Eugene Yeoh, an analyst with Deutsche Bank in Hong Kong.
Says Yeoh: I think they are budgeting to at least hold their position. They are just sobering up after the party.