VW to Expand Chinese Line-Up 29% by 2015 to Propel Sales

Volkswagen AG (VOW), Europe’s largest automaker, plans to expand its model line-up 29 percent by 2015 in China, a market the manufacturer sees as crucial in its drive to take the industry’s global top spot in five years.

Volkswagen will offer 90 cars, sport-utility vehicles, vans and heavy trucks in the country compared with 70 models now, Jochem Heizmann, who runs the automaker’s Chinese operations, said today at a Shanghai press conference. The company is targeting 3 million deliveries in China this year, he said.

The carmaker outlined plans in March to increase production 60 percent by 2018 in China, where Wolfsburg, Germany-based VW’s earnings last year surged by almost half. Volkswagen has set that year as its deadline for overtaking Toyota Motor Corp. (7203) and General Motors Co. (GM) as the world’s biggest carmaker.

VW’s 9.8 billion-euro ($12.8 billion) project to build factories and develop models in China by 2018 will be the country’s largest-ever automotive-investment program, Chief Executive Officer Martin Winterkorn said today in a statement distributed at the press conference held in advance of the Shanghai Auto Show. The company will expand its workforce by 33 percent to more than 100,000 employees in the period, he said.

New Factories

VW is counting on growth in China and the U.S., along with gains in the luxury-car segment with the Audi brand, to help offset declining demand in Europe amid a recession. Targets for China announced last month include adding seven car plants in the country, bringing the total to 19, and increasing production capacity there to 4 million vehicles a year by 2018 from about 2.5 million currently. Including its local joint ventures, VW’s group sales last year in China totaled 2.81 million vehicles.

“So you heard about the 4 million production capacity,” VW China Executive Vice President Weiming Soh said at the press conference today. “I guess as a sales guy I can’t say I will sell less.”

Audi plans to expand its dealership network 67 percent to 500 outlets in 2017 from about 300 now, Dietmar Voggenreiter, the unit’s head of Chinese business, said at the briefing.

To contact the reporter on this story: Christoph Rauwald in Shanghai at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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