Volkswagen on Friday unveiled the first Polo sedan made in China for sale to upscale Western drivers, opening a new era for the booming Chinese car industry, Associated Press (AP) reported.
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The AP report said the silver Polo, displayed to reporters by VW executives at the Shanghai factory run by the German car maker and a Chinese partner, is one of 600 destined for sale in Australia, [where German-built Polo hatchback models have been sold for some years].
Separately, Bloomberg News said that the Australian export cars would have 1.6-litre engines and that 3,000 would be shipped, at 600 a year, to fulfil a five-year contract valued at 339 million yuan ($US41 million).
The move comes just over a year after VW’s struggling Brazilian arm launched a locally-developed Polo sedan, based on the hatchback models it also builds, for both local sale and export to the USA and Europe. VW first showed the model to potential European buyers at last September’s Frankfurt motor show.
“This proves Shanghai Volkswagen is a truly international competitor,” VW board member Folker Weissgerber told Associated Press at the unveiling of the Australia-bound, Chinese-built Polo sedan, adding: “This car meets all international standards.”
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By GlobalDataAP said the move is unusual for the growing number of foreign car makers currently setting up operations in China because most focus on China’s booming domestic market – now the fastest-growing in the world – while only a few plan exports.
Volkswagen has said it plans to export Chinese-made cars to 84 countries within three to five years – if it can bring down costs and improve quality, the report noted.
“They’ve been building capacity and probably want to keep their options open,” Christopher Richter, a motor industry analyst with HSBC Securities in Tokyo, told Associated Press, adding: “After all, what if the Chinese economy slows down?”
AP noted that China has made and exported low-priced trucks, buses and other vehicles for decades — mostly to other Third World countries, and is also one of the world’s biggest automotive parts makers.
But so far, AP said, the economics of car making in the top ranks of the industry have worked against exports because most components are imported and strong demand has kept prices high.
The report said that General Motors’ joint venture in Shanghai makes Chevrolet Venture minivans for sale in the Philippines, but the company doesn’t plan to make China an export base.
“Our focus remains in the China market. China is such a huge market that we could sell all of our output here,” GM spokesman Raymond Chow told Associated Press.
Bernd Engelstaedter, Shanghai Volkswagen’s technical executive director, told the news agency the company will decide how to proceed after seeing how its inaugural shipment of Polos to Australia is received.
Asked whether China was likely to become a major car exporter, Engelstaedter told AP: “It’s just a question of time. The Chinese market is developing very quickly.”
AP said that the Polo shown to reporters in a cavernous hall at the Shanghai VW factory bears the company’s name in Chinese on its tail, but an executive said that might be switched to English.
“Australians might not be able to read the Chinese characters,” Chen Zhixin, managing director of the joint venture, reportedly said.
Associated Press noted that Volkswagen entered China in 1984, investing $US66 million in a joint venture with Shanghai Automotive Industrial Corp. and China National Automotive Industry Corp, and. since then, has spent more than $1.77 billion in China and extended the terms of that 25-year venture by another 20 years. The Polo factory has turned out 70,000 cars for sale in China since it opened last year, the report added.
AP said that, according to investment bank Goldman Sachs, China accounted for 80% of Volkswagen’s worldwide profits in the first half of this year, and noted that the company recently moved its Asia-Pacific headquarters to Beijing.
VW’s Polo plant is located in Autocity, a 4.4 billion yuan ($533 million) industrial park in the western suburb of Anting that planners say will eventually be bigger than the vehicle production zone encircling Toyota’s headquarters near Nagoya, Japan, Associated Press said.
The AP report said that Honda Motor also plans to start exports from China, opening a factory in the southern city of Guangzhou next year to make subcompact cars for sale in Asia and Europe.
The news agency noted that China’s own domestic car makers are a jumble of more than 120 small companies but Chinese officials have said they plan to consolidate them into a handful of big groups that can compete for a share of the world export market.
But for now, only foreign producers in China have the technology and size to sell to affluent Western buyers, Bonnell, the industry analyst, told Associated Press.
“It’s going to be the name ‘Honda,’ not ‘made-in-China,’ that sells the cars,” he reportedly said.
