Blog: Dave LeggettVW adding capacity in China

Dave Leggett | 17 July 2003

Volkswagen has been sounding pretty bullish lately about its plans to add production capacity in China. The worry is that China's auto industry could find itself with overcapacity in a few years' time. I heard today that SARS has failed to slow the Chinese economy down and fears are now rising about overheating and too rapid a growth pace. In the past, the Chinese authorities have reacted pretty decisively to inflationary fears - the state spending tap is turned off and the economy cools very rapidly. Public spending is a blunt instrument in China - and the state sector is still large. Automakers need to keep a close eye on the economic and political signals coming out of Beijing over the next six months.

One thing I've picked up from a supplier source today (usually very reliable, as they have orders) is that Volkswagen plans to make its upcoming 'City Van' in China as well as in Posnan, Poland. The Renault Kangoo-like LCV could be a good vehicle for China - low cost and utilitarian.


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