By Paul Chung
Image credit: @juergens.
Volkswagen is committed to being #1. In order to be the world’s top-selling automaker, it is setting its sights firmly on China-the world’s largest automobile market-despite recent setbacks in the country.
Volkswagen will invest over 9.8 billion euros over the next five years in what it dubs “the largest investment program in China’s automotive history.” Two-thirds of this sum will be dedicated to sustainable production and developing efficient, low-consumption vehicles in conjunction with its two Chinese joint ventures, FAW-Volkswagen and Shanghai Volkswagen (which boasts the largest market share of passenger cars in China). The German automaker’s announcement comes ahead of the 2013 Shanghai Auto Show happening this week.
Volkswagen, which currently markets 70 different models in China, plans to introduce another twenty new car, sports utility vehicle, van, and heavy truck models before 2015.
Closing the gap between the world’s number one and two automakers, Toyota and General Motors, will not be an easy task. Hence, Volkswagen is planning to litter the Chinese market with a significantly cheaper budget brand. The low-cost cars will help to leverage the company’s position among China’s growing middle class.
According to Reuters:
VW has long neglected budget cars, fearing that making money on stripped-down vehicles jars with its global pursuit of quality and profitability, a senior VW manager said on condition of anonymity because the matter is confidential.
It seems the German group is now prepared to put these concerns to one side in a bid to build a stronger presence in some of the fastest growing car markets.
Volkswagen’s success in China, however, hasn’t been without setbacks. Just last month, the automaker announced that it would be recalling nearly 400,000 cars in China due to mechanical malfunctioning concerns.