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FAW Making Jetta in SW China
[July 29, 2007]

FAW Making Jetta in SW China

(SinoCast China Transportation Watch Via Thomson Dialog NewsEdge) CHENGDU, July 30, SinoCast -- Chengdu FAW Automobile Co., Ltd. has started making Jetta cars this month under the wing of a leading automaker China FAW Group Corp. The move marks another significant step the parent FAW has made in western areas after its earlier two projects - Chengdu FAW Factory and Sichuan FAW Toyota Motors Co., Ltd. - in the southwestern province of Sichuan. Chengdu FAW Automobile, located in Chengdu, capital of Sichuan, is expected to turn out 24,000 Jetta cars a year, compared with its designed capacity of 100,000 units, and provide its products mainly for drivers in western areas. The Jetta cars produced in Changchun, the northeastern city where the FAW headquarters are located, have sold well in the southwestern market but not captured a big enough market share yet. The Chengdu-made cars are predicted to raise Jetta's proportion by about 50 percent in southwestern areas, said local dealers. Meanwhile, they will likely pull down the prices of Jetta cars from currently CNY 76,800 to CNY 101,800 to roughly CNY 5,000 to CNY 8,000. The production of Jetta in Chengdu is believed to sharply cut back its production cost and ease the pressure of the Jetta production line in FAW-Volkswagen Automobile Co., Ltd., which is operating beyond full capacity now, said Zhu Yanfeng, general manager of FAW. The move also mirrors FAW's support to the national strategy to develop western areas, the general manager stressed. Jetta has become the best-selling model nationwide when 184,522 Jettas were sold in 2006 by FAW-Volkswagen, the joint venture between FAW and German auto titan Volkswagen AG and located in Changchun, capital of the northeastern province of Jilin. The general manager has bet big on the southwestern market. Chengdu FAW Automobile will certainly be a footing for FAW to expand in southwestern areas with economy cars. There is bigger scope for Jetta's growth in western and central areas than in northeastern and eastern regions, industry analysts said, and the model should penetrate western and central areas with Chengdu as its foothold. Moreover, FAW will possibly seek for the approval from Volkswagen in due course to make the former Jetta as its proprietary model after the production in Chengdu, told an insider. The PQ32 platform will correspondently become a cradle for the independent products by FAW, and the former Jetta will be marked with the FAW logo instead then, he added. FAW and a Chengdu-based investment firm established Chengdu FAW Automobile in October 2002. The former has controlled 81.15 percent interests and the latter 18.85 percent.

Copyright 2007 Sinocast LLC, Source: The Financial Times Limited

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