Volkswagen AG plans to build a new commercial vehicle exclusively in Poland with annual output as high as 130,000, starting in 2003, sources told just-auto.com today.

The model, code-named VW357, also is dubbed A5-SLW or simply SLW for 'Stadtlieferwagen' ('city delivery van' in German). No pictures could be obtained, but it is expected to compete in the lightest segment of commercial vehicles, especially targeting Citroen Berlingo, Fiat Doblo, Peugeot Partner and Renault Kangoo.

Chink in armour

VW has led Europe in auto sales over 10 years, but it has been weak in this product sector for nearly a decade. VW Caddy, its core model here, was made only in Sarajevo, and output stopped in 1992, following the eruption of armed conflict in former Yugoslavia.

The German group has continued to sell Caddy-named vehicles by rebadging offerings of its subsidiaries - SEAT Inca with cargo space covered; and Skoda Felicia Pick-Up with cargo space exposed.

But VW's position in this market segment will further weaken before strengthening: Skoda stopped making Felicia Pick-Up in February 2001, and SLW is scheduled to enter production only in first-half 2003 (a postponement of an earlier target for fourth-quarter 2002).

SLW would be VW's third vehicle built exclusively in Eastern Europe (outside Skoda). Audi produces sports car TT only in Hungary, and VW plans to make its new sport-utility vehicle Colorado solely in Slovakia (starting in fourth-quarter 2001). Slovakia also rolls out all four-wheel-drive versions of VW's mid-sized Bora and Golf.

New Caddy?

Sources could not confirm whether SLW would be called Caddy. But they said the vehicle could be available in different body types, possibly including options for closed or open storage space.

SLW may don only the VW badge, according to several insiders. But certain signs suggest the model could appear under other marks. Last year, the German group considered basing production of VW357 exclusively at Skoda. Recently, Skoda chair Vratislav Kulhanek said his company's model range would lack a pickup for two years, perhaps indirectly indicating that part of SLW output would be badged Skoda, given the implausibility of the Czech automaker launching a commercial vehicle on another platform at roughly the same time VW357 is introduced… Meanwhile, SEAT has been keen to incorporate SLW into its model range, one informed observer said.

Origin of the species

VW357 would derive from a new passenger van (alternately labelled A5-MPV or VW358). Slated to enter production in September 2002, VW358 would originate from the platform for the upcoming Golf (code-named simply A5 or VW350), expected to be launched in August 2003. (Trial output of A5 is to start in May 2003.)
Skoda Felicia Pick-Up


[In alphabetic codes like A5, the letter is the platform ('A' is for mid-sized cars, while 'AO' is for small cars like VW Polo, and 'B' is for executive cars like VW Passat). The digit is the generation of the platform ('5' is the fifth era)… In numeric codes like 350, the first digit is the platform ('3' is for mid-sized models, while '2' is for small models and '4' is for executive models). The second digit is the generation (equal to the digit in alphabetic codes). The third digit is the body type ('0' is base version, while '7' is commercial van, and '8' is passenger van)… Caddy from Sarajevo, descendant from second-generation Golf, would be classified VW327 on this system.]

VW-Brand Models on A5 Platform

Model
Code 1
Code 2
Start of Production
Golf
A5
VW350
2003 August
Golf MPV
A5-MPV
VW358
2002 September
'Caddy'
A5-SLW
VW357
2003 first half
SOURCE just-auto.com
Seat Inca

A5-MPV would be made in a factory at VW headquarters in Wolfsburg, Germany. This site would supply completely-knocked down (CKD) kits of SLW for assembly at Volkswagen Poznan Sp z oo (VP), a plant wholly owned by VW in Poznan, western Poland.

Local plant, global profile

VP was established in December 1993, largely to skirt high import tariffs on new vehicles in Poland - then 35%. The market there boomed throughout the 1990s, and VW wanted to exploit the opportunity for each of its four main marks, so VP came to enjoy the biggest product range of any VW plant in the world, though its output of most vehicles entailed only superficial assembly. (In the past seven years, VP has rolled out the following models: Audi A6; SEAT Cordoba, Cordoba Vario and Inca; Skoda Fabia, Favorit, Felicia, Felicia Pick-Up and Octavia; and VW Bora, Caddy, LT2, Passat, Polo and Transporter T4.)

VW - Auto Assembly in Poland

Brand Model
1994
1995
1996
1997
1998
1999
2000
Audi A6
0
0
2
204
234
217
0
SEAT Cordoba
0
0
276
5620
4167
2771
0
SEAT Cordoba Vario
0
0
0
0
1173
0
0
SEAT Inca
0
0
0
0
321
0
0
Skoda Fabia
0
0
0
0
0
0
10980
Skoda Favorit
759
242
0
0
0
0
0
Skoda Felicia
0
7200
15334
25681
30385
33843
25173
Skoda Felicia Pick-Up
0
0
431
2776
3031
1059
548
Skoda Octavia
0
0
0
933
4975
7596
8329
VW Bora
0
0
0
0
0
379
376
VW Caddy
0
0
0
0
258
404
0
VW LT2
0
0
0
147
606
401
422
VW Passat
0
0
0
98
4866
4956
400
VW Polo
0
0
0
4863
8217
3529
0
VW Transporter T4
1756
6868
11662
19393
19265
19498
24012
Total zbg
2515
14310
27705
59715
77498
74653
70240
SOURCE Auto Technika Motoryzacyjna and VW

But Poland has reduced customs taxes every year on autos from European Union, and duties are scheduled to fall to zero in 2002, so VP has phased out several vehicles. (As a measure of the impact of lost market protection, Ford Motor Co and General Motors Corp closed their assembly operations in Poland last year.)

Skoda Octavia

However, VP has expected to continue assembling its staples: Fabia, Octavia and Transporter. When journalists visited in May 2000, the site was preparing to make 80,000 vehicles a year (320 a day) - split evenly between the pair of Skodas and Transporter.

VP, which employs over 2,600 people, also is erecting a DM210m paint shop with annual capacity for 130,000 vehicles in three shifts, due to open in May 2001. Managers there have said the surplus capacity of 50,000 was installed for the plant to be flexible in pursuing new projects: opportunities with VW 357 apparently have exceeded their expectations.

As VW has targeted annual output SLW at 100,000-130,000 for Poznan (120,000 is the favoured objective now), VP is expected to drop long-term plans for Skoda. This is consistent with careful remarks by Kulhanek about his company's intentions with VP. "This year and next year, we still will ship kits to Poland for assembly," he said.

Skoda Fabia

(Last year, though, Skoda said it would continue to cooperate with VP after import tariffs in Poland had disappeared, arguing the assembly in Poznan was preferable to adding capacity in Czech Republic. Skoda even contemplated using VP for a base to export to Eastern Europe, but this never materialised, and almost all cars from VP are sold in Poland with the exception of several thousand Passats shipped to Egypt. Officials at the Czech automaker also have expressed a desire to maintain an industrial presence in Poland, noting the country was the company's main foreign market under Communism.)

No comment from VW

VW has declined to comment on future products for Poznan, and it will not confirm whether VP would continue with Transporter. But assembly of this vehicle there is not affected significantly by Poland's dismantling of trade walls because over 90% of the volume has been exported - principally to Eastern Europe (mainly Czech Republic, Romania, Slovakia and Slovenia) and Western Europe (mainly Germany, Italy and UK)...Sources said SLW would be sold across Europe and Latin America.

VW Transporter

Officials at VP have stressed a commitment to assembling Transporter, noting the special tools required to produce the model are cheaper in Poland than in Germany.

Prospects in Poznan for T5 (the next generation Transporter) are ambiguous. If VP would assemble only 100,000 SLW, it would retain enough free capacity in its paint shop for meaningful volumes of T5. But insiders said VW ultimately wants Poznan to focus on one model.

VP, which has invested over DM350m, also has a foundry that makes cylinder heads, engine brackets, exhaust manifolds, inlets and steering-column housings. The foundry, opened in 1999, has daily capacity to make 120 tonnes of parts in three shifts, and it employs 600 (425 workers, 175 office staff). Customers include VW plants in Germany and Audi's engine factory in Hungary.

Engines, seats & wiring harnesses too

The foundry also supplies a VW subsidiary in Polkowice, southwest Poland: Volkswagen Motor Polska SA, a DM200m factory opened in 1999 to make 1.9-litre TDi engines for the four main marks of the German group. Annual production capacity is 540,000 in three shifts.

Also in Polkowice, VW owns 51% of Sitech Sp z oo, a venture formed in 1999 to make seats and upholstery. The other 49% is held by Karosseriewerke Dresden. Investment in the project has not been disclosed officially, but media reported the initial sum was DM74m.

A site in Gorzow, west of Poznan, has produced cables since 1993. It is a subsidiary of Bordnetze GmbH, a 50/50 venture between VW and German electronics group Siemens AG.


Contact Ryan James Tutak, associate editor of just-auto.com for Eastern Europe:
E ryan.tutak@just-auto.com
F +36-1 / 317-7257
T +36-1 / 266-2693

To view related research reports, please follow the links below:-

Volkswagen Strategic Review

Review of the German Automotive Industry

The automotive industry of central and eastern Europe