December 6, 2002

China now VW’s second largest market

Beijing, China – At a press conference in Beijing yesterday, Dr Robert Buchelhofer, member of the Volkswagen AG board of management and chairman of the Asia-Pacific region, announced that the VW Group will sell about 500,000 vehicles in China in 2002, up from 359,000 in 2001.

“We can already say with certainty that we will reach the half a million threshold this year for the first time”, said Buchelhofer. From January to October of this year, the Volkswagen Group sold over 416,000 vehicles in China. This is an increase of almost 40 percent over the same period of the previous year.

“This makes China Volkswagen’s second largest individual market after Germany”, continued Buchelhofer. This market success vindicates the wisdom of Volkswagen’s strategy for China. Since 1999, the carmaker has considerably extended the range of vehicles made in China and introduced new models to the market on an annual basis – for example the Audi A6, the Volkswagen Passat, Bora and Polo. According to Buchelhofer, the company is planning to continue along this path and intensify its policy. In the coming year, Volkswagen intends to produce at least two new models in China – the Gol and the Polo notchback.

The Golf will go into production at Shanghai Volkswagen, and will cost considerably less than 100,000 RMB ($ US 12,500). This car is aimed at first-time private buyers, the most rapidly expanding market segment in China. The Polo notchback will further strengthen the position of the successful range of products introduced to China in April of this year. The Polo was the first model whose production started in China almost at the same time as its world-wide market launch. Within the first six months of its market launch, 22,000 vehicles have already been sold in China.

Buchelhofer underlined that Volkswagen’s high flexibility will make it possible to offer each Chinese customer the vehicle of his or her choice in future. This demand could be met by both local manufacturing and imports. The Group is determined to offer the complete Volkswagen, Audi and Skoda range in China in the coming years. The focus will continue to be on local manufacturing.

“Current market developments indicate that sales figures will double in the next five years, giving us sales of one million vehicles in 2007”, continued Buchelhofer. This would represent a 2-fold increase in just five years. To achieve this goal, the company intends to invest in new products, new production, research and development capability, and modern technology. The Group plans to invest almost 600 million euros annually to 2007.

The Volkswagen Group is currently involved in two production joint ventures, Shanghai Volkswagen and FAW Volkswagen. In addition, it is a majority shareholder in a gearbox joint venture in Shanghai. Volkswagen has over 16,000 employees in China, and sold over 2.7 million vehicles from 1985 to 2002 in this country.

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