Volkswagen AG, the largest overseas carmaker in China, said it will stop investing in China to expand production, as it seeks to cut costs in the world's third-largest vehicle market amid declining market share.
Volkswagen, which makes passenger cars through two ventures in the country, will try to increase cooperation with partners FAW Group Corp (
Volkswagen, which counts China as its biggest market outside of Germany, is trying to stem the decline in its market share, which fell to 18 percent in the first half, from two-thirds since it started making cars in China in 1985. The company said it will add 10 to 12 new models in China before 2009.
"All areas of the business are being closely scrutinized," Volkswagen's China head Winfried Vahland said. "We are in a transition phase where we're laying foundations preparing ourselves for a more sustainable development of our company in China."
The company's joint venture with Shanghai Auto will start selling the Skoda brand in 2007, Volkswagen said. China's total vehicle demand is expected to more than double to 15 million units in 2008 from 6.4 million units this year. Rising automobile demand is increasing oil consumption by vehicles in the country, the world's largest oil consumer after the US.
Volkswagen makes Bora, Jetta and Golf models, as well Audi- brand luxury cars. The Wolfsburg, Germany-based carmaker produces Santana, Passat, Gol and Polo cars with Shanghai Auto.
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