Volkswagen Group China

BUSINESS DEVELOPMENT

Volkswagen opened a new vehicle plant in Changsha, southern China, in May 2015. The facility has the capacity to produce a total of 300,000 Volkswagen Passenger Cars and ŠKODA brand models per year. More than 4,000 jobs are expected to be created at the plant, with a further 4,000 at the adjacent supplier park. The plant is the SAIC VOLKSWAGEN (formerly Shanghai-Volkswagen) joint venture’s first production facility to receive the “Triple-Star Green Building Design Award”, China’s highest state award for environmentally friendly factory planning. Vehicles and components are currently manufactured at a total of 20 locations in China. There are also plans for two new vehicle plants in Qingdao and Tianjin on China’s east coast. These will be constructed in cooperation with our joint venture partner FAW and will manufacture environmentally friendly models. We intend to gradually expand capacity in China to around five million vehicles per year by 2020. The joint ventures will maintain a stable level of investment in 2016 of around €4 billion. These investments will be financed by the joint ventures from their own funds.

We continued our e-mobility initiative in China with the launch of the Golf GTE and the Audi A3 e-tron as import vehicles. Under the e-mobility strategy tailored to this market, both joint ventures will supplement existing and future import models with the successive introduction of a total of 15 locally produced plug-in hybrids and electrified models by 2020. In June 2015, Volkswagen signed a cooperation agreement in the area of e-mobility research with Chinese joint venture partner SAIC, under which the main production facility in Anting will be extended to locally develop and produce plug-in hybrid and electric models. Auto Shanghai 2015 saw the unveiling of the Audi A6 L e-tron and the concept car Volkswagen C Coupé GTE plug-in hybrid models that will be exclusive to the Chinese market. The Audi A6 L e-tron will be manufactured at the Audi plant in Changchun operated by the FAW-Volkswagen joint venture and the Volkswagen C Coupé GTE by the SAIC VOLKSWAGEN joint venture in Anting.

The Volkswagen Group offers more than 150 imported and locally produced models in the Chinese passenger car market, representing the Volkswagen Passenger Cars, Audi, ŠKODA, Porsche, Bentley, Lamborghini, Bugatti and Volkswagen Commercial Vehicles brands. In fiscal year 2015, the Volkswagen Group delivered 3.5 (3.7) million vehicles (including imports) to customers in China in a highly competitive market. Five models from the Volkswagen Passenger Cars brand – the Tiguan, Lavida series, Sagitar, Jetta and Santana – were among the ten best-selling cars in China. At Audi, the Audi A6 L, Audi A4 L, and Audi Q5 were the best-selling models. At ŠKODA, the Octavia was the top seller. The ŠKODA Yeti recorded the highest increase.

Our two joint ventures, SAIC VOLKSWAGEN and FAW-Volkswagen, produced a total of 3.4 million vehicles in the reporting period, down 3.1% year-on-year. The joint ventures produce a mixture of established Group models and those specially modified for Chinese customers (e.g. with a lengthened wheelbase), as well as vehicles developed exclusively for the Chinese market (such as the Volkswagen Lamando, Lavida, New Bora, New Jetta and New Santana). Production commenced on the Gran Santana, a model specially developed for Chinese customers, and on the successors of the ŠKODA Fabia and Superb in the reporting period.

The joint ventures generated a proportionate operating result of €5.2 billion in 2015, up marginally on the prior-year figure. The impact of the more competitive market environment was compensated by positive exchange rate effects, the optimization of material costs and consistent cost discipline.

The figures of the Chinese joint venture companies are not included in Group earnings as they are accounted for using the equity method. Their profits are included solely in the Group’s financial result on a proportionate basis.