Europe’s largest automaker, Volkswagen AG, announced on Thursday its plans to increase its production of vehicles in China by over 60% in the next five years. The Germany automobile giant last year saw its earnings in China increase by close to a half.
A new plant has been approved by the company’s supervisory board that could build as many as 300,000 vehicles each year in China. That plant will start its operations sometime in 2016, said Martin Winterkorn the CEO of Volkswagen.
The capacity of production in China for Volkswagen will increase to more than 4 million by 2018 with the addition of seven new factories said the CEO. WInterkorn said the German automaker was putting its faith in China and in the U.S. as well as increasing sales in its luxury brand Audi. This is to help offset the continuing lower demand for new cars in the recession plagued eurozone.
The upside for China was huge said the Volkswagen CEO, but even that particular market has been reduced to single digit growth after enjoying double digit growth. Winterkorn said that single digit growth would be the norm for the future.
Volkswagen’s goal is to overtake both Japan’s Toyota and the United States’ General Motors to become the largest carmaker in the world. In 2012, its two auto ventures in China helped to sell over 2.61 million vehicles or close to 28% of all vehicles, the company sold in 2012.
VW also owns Seat, Skoda and the high-end luxury brand Porsche.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.