BEIJING --Volkswagen AG will introduce as many as a dozen new models in China before 2009 as part of a plan to revitalize its flagging China operations.
Winfried Vahland, the new CEO of Volkswagen Group China, revealed this and other elements of the turnaround plan here on Monday, Oct. 17.
"The leadership and decision-making authority now based in China create the basis for a more efficient business process. Speed is today the most decisive success factor," said Vahland.
VW vested more decision-making power in the China Group executives in mid-2004 and pledged to begin making purchasing decisions in China rather than in Wolfsburg, Germany.
VW was the first foreign automaker to build cars in China. From the late 1980s until a few years ago, it dominated the sedan market in China. In 2003, it still held 33.3 percent of the car market, according to Automotive Resources Asia, a consulting firm in Shanghai.
But the main customers in China's car market began shifting from the government to individuals about five years ago. VW's Germany decision-making structure prevented it from responding to the fast-changing market. By last July, VW's China market share had fallen to 11.9 percent.
VW is calling its latest revival plan the Olympic Program because the company aims to complete it by 2008, the year the summer Olympics will be held in Beijing.
"We want to be very realistic," said Weiming Soh, vice president of sales and marketing for Volkswagen Group China. "This is an ongoing improvement program. By the time of the Olympics, we will have a chance of completing our program."
Different positioning of cars produced at Shanghai Volkswagen and FAW-Volkswagen, although both joint ventures assemble Volkswagen-badged models. The addition of the Skoda brand, starting in 2007, will further that differentiation.
Introducing 10 to 12 products by 2009. This includes new models and successors to current models. It covers the VW, Audi and Skoda brands. The first launch will be a new version of the Passat next month.
Cost reduction through centralized purchasing and increased localization.
Increased cross-joint venture cooperation, for example, in powertrain production.
VW's joint-venture partners in China -- Shanghai Automotive Industry Corp. and First Auto Works Group -- will be responsible for executing the program. Volkswagen Group China will help coordinate their efforts, Soh said.
The two huge state-owned companies have their own captive supplier groups and have been loathe to share suppliers in the past. That has changed, Soh said, adding: "With a timetable and pace -- finishing by the time of the Olympics -- we have the commitment of all our partners."