SINGAPORE: EXCLUSIVE - VW on multi billion dollar shopping spree
Car component manufacturers throughout the world are to get a chance to share in China's rapid expansion of its already burgeoning vehicle industry, writes Mike Duffy.
German car giant Volkswagen is casting around for quality parts at the right price in the lead up to producing one million cars in China by 2007.
The company will send a top-level delegation to Australia next month to explore export opportunities which could be worth vast sums in export earnings to local companies.
But the company said yesterday that suppliers in Europe and other parts of the world would be given a chance to break into China.
High on VW's shopping list are heavy alloy castings, including cylinder heads and blocks, windsceens and other specialised finished products - for which Australia enjoys high recognition throughout the world.
President of VW's Asia Pacific region Dr Bernd Leissner said: ''We know Australian components manufacturers make world quality products at a most competitive price.
''We are coming to Australia to open up negotiations for the supply of what could be highly significant numbers of components - a million cars a year is no small figure, you may agree.
''Australian component makers are excellent in many area so it is a natural strategy for us to look at tapping into that market.''
To be successful, Australia's parts maker will have to better European manufacturers.
Dr Leissner said it was too early to say whether future supply contracts would take the form of conventional exports or facilitating local manufacturers to set up factories in China. This would be dependent on final price, he said.
''We have to take a close look at labour costs, raw material and manufacturing costs.
''But I believe you are good - with so much technological knowhow, we have to come down there and take a look,'' he said.
He said the delegation would meet with five or six key manufacturers, but refused to name the companies he would be meeting.
If a business case can be made, VW will send in a purchasing task force to finalise supply arrangements.
Dr Leissner said VW and its joint-venture partner was looking at exporting vehicles from China - further underscoring the opportunity open to parts makers.
Dr Leissner was speaking in Singapore at the VW group's annual conference on results in the Asia Pacific region.
VW sold a record 620,000 in the region last year, representing 12.4 per cent of the group's 4,984,000 worldwide sales in 2002.
The company sold 513,000 cars in China - making it the second largest market to Germany, ahead of the US, Brazil and England.
Since 1985, VW has sold more than 2.8 million vehicles in China claiming half the local ''car parc'' with VW and Audi brands and the No 1 car supplier.
VW sales and marketing director Dr Robert Buchelhofer, said it was too early to say what impact the threat of war in Iraq was having on the global demand for cars.
He said there had been no noticeable impact on sales to date.