FAW-VW Gears Up in West China

As the sales champion of 2008, can FAW-VW Automobile Co., Ltd. continue its good performance in 2009?

The company will probably expand its distribution networks in the western Chinese market this year, revealed a top executive of FAW-Volkswagen Sales Co., Ltd., as the first-tier markets of the country have become mature, while customers in the western regions are able to afford FAW-VW Automobile's small cars like Jetta. The situation is just like what it was in the eastern market three to five years ago.

Although bullish on the western market, FAW-VW Automobile will not expand blindly. The company has delayed carrying out a production expansion plan for its Chengdu plant till 2011.

Besides, due to the bad economic situation, and depression in the automobile market, FAW-VW Automobile will only promote one new car model this year, namely, Golf A6. Lengthened Magotan, formerly due to be launched in 2009, will not be rolled out until a year later. As to compact crossover SUV Audi Q5, the car model will be put into production in a new assembly plant in the second half of this year.

A director of CSM Worldwide in the Greater China region predicts that FAW-VW Automobile is able to maintain a good growth in 2009, although the company will only promote Golf A6, since FAW-VW Automobile's strengths are veteran brand Jetta, and long-wheelbase Audi A4L, and Magotan that are equipped with direct shift gearbox (DSG) technology. CSM Worldwide is a leading provider of auto information services.

FAW-VW Automobile, the joint venture between China FAW Group Corporation (CFGC) and Volkswagen, gained sales of nearly 43,000 vehicles in January 2009, a good beginning for the whole year. The top executive mentioned above discloses that the company's cars were sold well during the Spring Festival. Currently, FAW-VW Automobile has very small stockpiles.

He predicts that the domestic market will keep growing in 2009, although the growth will be slow. What's more, auto giant General Motors Corporation (NYSE: GM) is discussing with CFGC over the setup of a light commercial vehicle venture, in an effort to share the Chinese market.

A notice of the State Administration for Industry and Commerce (SAIC) issued on January 20 has released the name of the venture, indicating that the cooperation between the two parties is making progress. Everything seems to indicate a good future for FAW-VW Automobile.

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