FAW-VW: Sales soar in 2009

Changchun joint venture on pace to reach target of 1 million by 2013

Sino-German joint venture FAW-Volkswagen recently announced that full-year sales of its Volkswagen badge will increase at least 35 percent over last year, alone surpassing the combined sales of 513,000 units for both its Volkswagen and Audi brands in 2008.

The 50-50 joint venture sold more than 390,000 Volkswagen models and some 120,000 Audi cars last year.

In the first 11 months of this year the company sold a total of 616,509 Volkswagens and Audis, up 31.9 percent over the same period in 2008.

"Sales of our Volkswagen brand will continue robust growth of more than 20 percent next year," said Hu Yong, the joint venture's vice-president for sales and marketing.

According to Hu, the company is likely to reach the strategic goal of producing and selling 1 million cars from its two brands by 2013, five years ahead of the schedule set in a strategy released earlier this year by the venture's German parent company.

FAW-Volkswagen began to prepare for the ambitious goal two years ago. Its planning in personnel, operations, purchasing and production are all based on the 1-million-unit blueprint.

Yet Hu admits the company now faces a big problem with under capacity.

After the global financial crisis broke out in the second half of 2008, most carmakers were very conservative about the market performance, but then were surprised by the rapid growth in the Chinese market this year. Most are now troubled by shortfalls in production capacity.

FAW-Volkswagen currently has two auto plants in northeast China's Changchun city with a combined annual capacity of 660,000 vehicles. Those facilities are expected to up production to 750,000 or 800,000 units.

The joint venture began construction in May on a 5 billion yuan, 150,000 unit plant in Chengdu, capital of Sichuan province, that will start operation at the end of next year. Its long-term capacity is set to be 300,000 or even 350,000 cars.

Hu noted that the 1-million-unit project is not only about raising production capacity but also about building a broad sales network with qualified dealership services.

He began two projects at the beginning of this year to improve the sales and marketing capability of the joint venture. One is designed to strengthen cooperation with dealers and to help raise their service level, and the other is to enhance sales management inside the company.

From 2010, the company will for the first time reduce its order processing time from one month to one week in a bid to better manage its stock.

The company now has 350 dealers across the country for its Volkswagen brand. In 2009 it built 39 new showrooms and upgraded 102 others. In the next several years it will expand the sales network by 20 percent annually, said the company.

At the joint venture's Volkswagen dealership conference held earlier this month in Xiamen, Fujian province, nearly 90 percent of dealers said they were satisfied with their profits this year.

The joint venture also has 149 authorized dealers for its Audi brand. The number is expected to rise to 200 or 250.

FAW-Volkswagen aims to establish about 1,000 dealers in the long term.

Founded in 1991, FAW-Volkswagen now produces a range of Volkswagen models, including the Jetta, Bora, Golf, Caddy, Sagitar and Magotan. It also makes the Audi A6L, A4L and Q5.

(China Daily 12/28/2009 page6)