Volkswagen is to boost purchasing from Chinese suppliers as it slashes costs to sharpen its competitiveness, the carmaker told Reuters on Friday.
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“The goal is to sign by the end of 2006 contracts worth $US1bn of exports to the group,” a spokeswoman told the news agency.
Last June, group purchasing chief Francisco Javier Garcia Sanz told Reuters VW’s target was to have $1bn in annual supplier contracts from China within three years compared with around $250 million a year at that time.
VW said it also aims to have its Chinese operations buy 80% of their content locally by 2008 and to have its two joint ventures there bundle procurement, the report added.
The news agency noted that Volkswagen is conducting a review of its in-house parts business in Germany, much of which it says is uncompetitive. Stepping up buying from low-cost China could exert pressure on staff to make cost concessions in negotiations now under way.
VW has said up to 20,000 jobs are at risk at its plants in western Germany, Reuters added.
It said that, in October, Volkswagen hammered out an agreement with 38 suppliers to cut purchasing costs by hundreds of millions of euros by forming more stable strategic partnerships with a smaller group of partners, and is now working with them on improving quality.
