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VW and JAC jointly to produce commercial vehicles

By Staff reporter | 28 November 2017

Volkswagen and Jianghuai Automobile (JAC Motors) signed a memorandum of understanding to set up a joint venture to develop and sell commercial vehicles in China, according to local reports.

The two companies signed a preliminary agreement to set up a 50:50 joint venture in the city of Hefei in Anhui province, near the headquarters of JAC Motors. 

VW said the agreement covers the development and production of conventional and new energy multi functional and commercial vehicles, including electric vehicles. The scale of the investment and the operational timing of the joint venture has yet to be announced.

The two companies want to be in a strong position to exploit the anticipated strong growth in the new energy vehicle demand in the country, driven by ambitious government-mandated targets of 2m annual sales by 2020 and 3m by 2025.

The country's commercial vehicle segment has been growing strongly, by over 17% to approximately 3.425m units in the first 10 months of 2017, according to the China Association of Automobile Manufacturers.

Sales of new energy vehicles, mostly electric vehicles, increased by over 45% to 490,000 units in the same period.

Hochem Heizmann, head of Volkswagen Group China, said the two companies have complementary strengths in the multi functional and commercial vehicle segments. His company sold 480,000 light commercial vehicles worldwide last year. 

JAC Motors produces a wide range of vehicles, including passenger vehicles, trucks and buses, with 427,000 units sold in the first 10 months of the year.

An agreement with Volkswagen would allow it to strengthen its position significantly in the domestic market.