Blog: Dave LeggettVW Polos out of China

Dave Leggett | 1 December 2003

The news that Volkswagen is to start exports of Chinese-made Polo saloons to Australia is a bit of a milestone and may set alarm bells ringing. VW Australia maintains that the usual low-cost interpretation of a move like this would be a bit misplaced in this instance as the cars are not very cheap to build, occupy a premium market niche and volume will be low. But it is also claimed that the cars meet VW's international quality standards. Should be interesting to see how well built the cars really are. My impression has been that cars made in China for the local market are generally quite poor quality but maybe VW is making sure that this small export batch is particularly good.

The big opportunity in China is of course the local market, but with all the capacity going in there at the moment, perhaps we shouldn't overlook the export opportunity.  And maybe those high(ish) parts costs will be coming down in the future as scale economies come into play, making China a genuine low-cost manufacturing location in international terms.

There again, the cynic in me is wondering whether this small volume export deal is a flag-waving exercise being undertaken for mainly political reasons.


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