FAW, SAIC and VW heading south together

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At the last Guangzhou Auto Show, VW announced that it was going to head south straight into the Japanese car loving nest of Guangdong to take on the local strong hold of Guangzhou-Toyota and Guangzhou-Honda. VW has remained traditionally strong in provinces north of Shanghai but has remained weak sales wise in Southern China.

VW is planning to build two new southern factories with its two big joint venture partners, Shanghai Automotive Industry Corporation (SAIC) and First Automobile Works (FAW) before 2013, and production is aimed at 200,000 vehicles per year in the South of China. Official plans for the southern expansion are expected to be announced at next months Beijing Auto Show.

VW’s current China factories are located in Shanghai, Changchun, Chengdu, and Nanjing, all of which cover the center, east and north of China but completely ignore the southern provinces. Southern provinces account for 30% of VW’s sales in China, where as Toyota and Honda take 70% of their sales from the south, with Toyota being the strongest player in the area.

The two factories will be set up to produce different models, SAIC will produce the VW and Skoda range, where as FAW will produce VW models and Audi models. As for Seat in China, it appears that research is underway to find out for sure if another VAG sub brand is just what China really needs, although it is likely to be introduced to appeal to an ever younger group of reasonably affluent southern consumers.