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Mon, Dec 15, 2008 - Page 10 News List

Volkswagen plants to suspend production in China

AP AND BLOOMBERG , BEIJING

Two Chinese auto plants run by German automaker Volkswagen AG through joint ventures are planning to partly suspend production lines to conduct maintenance work, state television reported yesterday.

The news comes amid a huge slump in sales of vehicles in China, the world’s second-largest vehicle market after the US.

China’s CCTV said in its midday bulletin that FAW-Volkswagen Automobile Co plans to suspend part of its production at a plant in Changchun, the capital of Jilin Province in northeastern China, at the end of the year to carry out maintenance.

Shanghai Volkswagen Automotive Co will also suspend work at its production line for half a month from sometime next week to early next month, the Beijing News Daily reported.

The reports did not give details and calls to Volkswagen’s office in Beijing and the two joint venture companies rang unanswered yesterday.

Volkswagen sold about 910,000 vehicles to customers in China last year.

Vehicle sales in China fell 16 percent last month — a sharp reverse for China’s automakers, which saw sales grow by 18.5 percent last year. Global automakers were counting on fast-growing Chinese sales to help drive revenue growth as sales elsewhere weakened.

Industry Minister Li Yizhong (李毅中) said on Friday Beijing is considering ways to revive sales including cutting taxes, offering low-interest loans or forcing older vehicles off the road.

Separately, Toyota Motor Corp. will delay investment in boosting capacity at its overseas factories as declining sales and a strengthening yen reduce earnings, the Nikkei Shimbun reported.

The automaker will freeze investment in a plant in Tianjin, China that makes Crown sedans and delay starting operations at a factory in Changchun until after 2011, the Nikkei reported without saying where it obtained the information.

The company, based in Toyota City, Japan, will also delay making Corolla cars in Brazil and India, the Nikkei said.

“We have been reviewing our new projects including in India, Brazil, China and the US, as we announced on Nov. 6,” Hideaki Homma, spokesman for Toyota, said yesterday.

“Nothing has been decided. We will report if there are any changes to plans,” he said.

Toyota has been spending ¥1.5 trillion annually (US$16.46 billion) on new facilities worldwide in the past few years, the Nikkei said.

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