Volkswagen to Launch Cheap Model in China by Yearend

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Last updated at: (Beijing Time) Wednesday, July 03, 2002

Volkswagen to Launch Cheap Model in China by Yearend

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Competition in the Chinese low-price car market will heat up as German auto giant Volkswagen Group has announced it plans to manufacture a new model at a price of less than 100,000 yuan (US$12,000) in China by the end of this year.

Michael Wilkes, a spokesman for Volkswagen's China operation, said Tuesday that the company will produce the model in the Shanghai Volkswagen plant, a joint venture with Shanghai Automotive Industry Corp (SAIC) - one of the nation's top three domestic automakers.

It will be the first time for Volkswagen Group, which commands more than 50 per cent of the Chinese passenger car market, to launch a model priced below 100,000 yuan in China.

"The market segment is growing very strong. We are watching closely and we want to be part of the growing segment," Wilkes said.

But the design of the new model has not yet been decided.

Analysts predict the model will possibly be a redesigned Volkswagen Golf.

Jia Xinguang from the China National Automotive Industry Consulting and Development Corp, said that cars selling for less than 100,000 yuan (US$12,000) will make up one of the fastest-growing market segments in China in coming years.

According to statistics of the China Association of Automobile Manufacturers, sales of such Chinese-made cars during the first five months of this year were 70 per cent higher than in the same period last year.

"I think Volkswagen also hopes to change its image as a producer of medium and up-market cars in China and to appeal more to average local consumers through the launch of this lower priced model," Jia said in an interview with China Daily.

Currently, the company produces its Polo, Santana and Passat in Shanghai Volkswagen, and Jetta, Audi A6 and Bora in FAW Volkswagen, a joint venture with the First Automotive Works Corp based in Northeast China's Jilin Province. The Audi A6 is the most expensive foreign car made in China so far.

Many foreign automakers have begun producing cheap cars in China to cash in on the market segment.

General Motors, the world's No 1 automaker, makes the 1.6-litre Sail compact car in Shanghai GM, its joint venture with SAIC.

Italy's Fiat Auto manufactures its Palio in East China's Jiangsu Province.

The competition in the segment is also fuelled by cheaper cars produced by some local manufacturers, includin Geely Group - a privately owned Chinese carmaker in East China's Zhejiang Province and Tianjin Automotive Industry Corp, which provide cars priced at 30,000-50,000 yuan (US$3,600-6,000).

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