Volkswagen will launch its low price vehicle in 2016

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Volkswagen will launch its low price vehicle in 2016
 
- Volkswagen announced it would launch its low price vehicle in China in 2016. The future model (segment A) will be marketed under a new brand at a price averaged under 8,000€.

- The German group could sell this model throughout Southeast Asia and India, but it does not intend to sell this vehicle on the European market, in order not to penalize the Volkswagen Seat and Skoda brands present in the region. These brands offer indeed city cars such as the Up, Mii and Citigo at rates between 9,000 and 10,000 €.

- Volkswagen, who up to now was absent from the segment of low price cars, believes that this segment has great potential. According to its own estimates, 8 million low price vehicles were sold worldwide in 2012, representing more than 10% of the global car market.

- According to Volkswagen, the global market for low price cars is expected to double by 2018, from 8 million to 16 million units, which represent the volume of the entire European market (all models) at that date.

- It is to be noted that Volkswagen will launch its low price model in partnership with FAW, one of its two Chinese partners who manufactured in 2013 nearly a million and a half vehicles for the German carmaker.
 
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World regions where manufacturers set up their plants

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World regions where manufacturers set up their plants
 

- We have already seen that the first 6 global carmakers have plant operating regions that are very different. The same goes for the following 6 manufacturers (from the 7th to 12th worldwide manufacturer).


- The Fiat-Chrysler group makes its vehicles at 74% in North America (Chrysler) and South America (Fiat). Europe accounts for 25% of the total production of the group (Fiat) and Asia only 1%. This is the only major manufacturer to have such little presence in Asia.


- The Honda Group manufactures more in America (51%) and Asia (45%), its region of origin. Europe accounts for only 4% of world production of the group.


- PSA produces mainly in Europe (71%). Its production in Asia (19%) is increasing year by year. It is already twice the amount that was achieved in America (South).


- The Suzuki group produces 96% in Asia, its region of origin. This is the least globalized manufacturer worldwide.


- The BMW group produces mainly in Europe (68%), but its foreign production increases every year.


- In the same way, Daimler produces mainly in Europe (79%), and external production is increasing year by year. It is currently the least decentralized European manufacturer.

 
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Plants currently under construction in China

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Plants currently under construction in China
 
- There are currently eight auto plants under construction in China in order to adapt production to the ever growing local demand:
-Fiat is building a new plant in China with GAC.
-BAIC is currently building a new plant in Zhuzhou.
-Ford and Jiangling just opened a new plant in Nanchang.
-Guangzhou Honda started building its third plant in China.
-Dongfeng Kia is currently building its third plant in China.
-SAIC-GM-Wuling will build its third plant in Chongqing.
-VW has just opened its sixth plant in Ningbo (with SAIC).
-Renault and Dongfeng are awaiting approval from the Chinese government to build their first factory in China.
-All these plants will be operational by 2014 or 2015.

 

- Since 2011 the Chinese market has increased by one million units per year, and that for the first time will exceed 20 million units in 2013.
 
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Fiat increases its production capacity in China for the arrival of new models

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Fiat increases its production capacity in China for the arrival of new models
 
- The joint venture between GAC (Guangzhou Automotive Corporation) and Fiat-Chrysler currently has one plant in China, located in Changsha (Hunan province of China), with a capacity of 140 000 units a year.

- The Viaggio compact sedan is the only model currently produced on site. The Viaggio hasn't yet meet its expected success. Indeed, less than 32 000 units were sold in China in the first nine months of the year. This corresponds to an annual rate of less than 50 000 units in a market of about 20 million units. A second model will be produced on this plant, the new SUV Jeep Cherokee, planned for late 2014 / early 2015 (90 000 units a year).

- However, Fiat-Chrysler maintains its goal of 500 000 sales in China in 2015. To achieve this, the joint venture expects the arrival of new models, requiring it to increase its production capacity in China.

- In this objective, a second plant (located in Guangzhou) with a production capacity of 160 000 vehicles per year is currently under construction. It  will produce off-road vehicles from the Fiat brand, models from the GAC brand as well as electric vehicles whose brand has not been specified. It could be a new brand dedicated to this type of vehicle, such as other brands that already exist in China.
 
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A twelfth Volkswagen plant in China

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A twelfth Volkswagen plant in China
 

- This month the Volkswagen Group opened its new plant in Ningbo, located south of Shanghai. This is the  manufacturer's twelfth plant in China (and the carmaker's one hundred and fifth plant in the world).


- The site (created with its partner SAIC) will have a production capacity of 300 000 units per year. The first model to be manufactured in Ningbo will be the Skoda Superb. The current European version of this model has not yet been made in China .


- The Volkswagen Group has recently opened factories in Foshan (with its partner FAW) and Urumqi (with its partner SAIC), and plans to open another in Changsha in 2015 (with its partner SAIC). Two other sites are planned for 2016 and 2017 (with FAW).


- The German group's goal is to reach a production capacity of about 4 million vehicles per year in China by 2018. The Volkswagen Group will sell this year 3 million vehicles in China against 2.6 million in 2012, representing an increase of 15%.


- This increase is comparable to the rise of the Chinese market as a whole. Thus, the Volkswagen Group maintains its market share of around 17-18% in 2012 and 2013, and hopes to maintain this rate of penetration until 2018.

 
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