Volkswagen has denied local media reports it would stop production in China for a month to reduce swelling inventory.

“Volkswagen’s two joint ventures in China are working on the right track currently,” local spokesman Rudolf Dreithaler told China Daily News. The report of a production halt between late December and mid-January “is not true. Volkswagen won’t stop production in China.”

“The two joint ventures have finished our 2008 production target of 1m units in China,” added VW spokeswoman Molly Yang. She said the decision to arrange maintenance work at two joint venture factories during Christmas and New Year holidays was routine.

“This had absolutely nothing to do with the financial crisis. The industry downturn makes people too sensitive,” Yang said, adding that production would stop for maintenance for only three days during the  Christmas holidays.

The report noted that, as a German firm, Volkswagen has two days off for Christmas every year [it is not a holiday in most of Asia] and will use the downtime to upgrade parts of production lines for new models due next year.