Volkswagen AG's joint venture with First Automotive Works Corp
(FAW), one of the top Sino-foreign car partnerships, expects its
2007 profits to climb by at least a quarter, helped by brisk sales
and cost-cutting efforts.
The venture, FAW Volkswagen, in the northeastern city of
Changchun, will have a "minimum" profit growth of 25 percent this
year from 2006, said Joachim Wedler, its vice-president in charge
of finance.
But Wedler didn't reveal how much the firm - in which FAW holds
a 60 percent stake and Volkswagen 40 percent - will earn this
year.
Weiming Soh, the venture's sales chief, said it plans to sell
more than 400,000 cars this year, up from 350,000 units last
year.
In the first five months, its retail sales jumped by 25.1
percent year-on-year to 173,218 units, making it No 3 after General
Motors' venture with SAIC Motor Corp and Volkswagen's other
partnership with SAIC.
FAW Volkswgen's June sales are expected to exceed 40,000 units,
Soh said.
The company's bold profit and sales projections came amid
blistering growth of China's vehicle market. Sales of all
China-made vehicles increased by 22 percent to 3.65 million units
from January to May, including 2.12 million passenger cars,
according to industry data.
In the first four months, combined profits of the top 16 Chinese
auto groups reached 18.1 billion yuan, rocketing by 51.3
percent.
Wedler said FAW Volkswagen will use more locally made engines
and spare parts to cut costs.
"We are shooting for a very high localization rate to have more
financial power to beat competition," he said, without
elaborating.
Competition in China's passenger car market has been heating up
with price incentives and product launches. Carmakers offered some
50 price cuts in the first five months of this year, according to
data from FAW Volkswagen.
An Tiecheng, the venture's general manager, said it plans to
roll out at least two new models under the Volkswagen and Audi
marques annually in the next five years to woo increasingly
sophisticated buyers. Audi is the luxury car unit of
Volkswagen.
The venture will launch a Volkswagen Magotan large-sized sedan
next month. Its current lineup includes Volkswagen's Jetta, Bora,
Golf, Sagitar and Caddy as well as Audi A6 and A4.
(China Daily June 29, 2007)