VW denies suspending diesel car plan in China

Although Volkswagen is being bothered by China's short diesel oil supply, and unable to smoothly carry out its diesel car plan, Volkswagen Group China still definitely denies the story that it was suspending the diesel car project. 

Previously, the diesel cars put into operation in places like Shanghai have retreated from the market, because of unapparent fuel-saving effectiveness. Currently, Shanghai Volkswagen Co., Ltd. has ceased all diesel engine plans.

Analysts, talking over how long the automobile giant is to insist on its promotion of diesel cars, guess that Volkswagen has suspended its diesel car project in China.

On August 24, 2008, Volkswagen Group China explained that the promotion did not go smoothly, mainly because of tight supply of oil products in the Chinese market, instead of its suspension of diesel car promotion.

A person in the know releases that Volkswagen has not given up its promotion plan, because it expects the country will probably unleash restrictions on diesel cars as oil prices are to continue to rise after the Olympic Games.

Recently, Zhang Guobao, the vice director of the National Reform and Development Commission (NDRC), revealed that the country was to react to the flying oil prices after Beijing 2008 Olympic Games was over, an effort to encourage carmakers to launch cars using renewable energy.

As everything now indicates that China is unlikely to relax restrictions in large cities like Beijing, Volkswagen, which has been lobbying the Chinese government to support diesel cars, is rather disappointed, said Zhong Shi, an auto analyst, in an interview.

An expert describes Volkswagen's embarrassment like this: the auto giant is to suffer great losses if it gives up the promotion of diesel cars, but it is unable to find breakthroughs under current circumstances.

In fact, diesel vehicles have sold well in both Europe and the Americans. In Europe, the vehicles take up half of the market, and Volkswagen has been a leader in related technologies.

In a sustainable development report issued in late July, the auto giant pointed out that it would still focus on explosion engines consuming traditional fuels in providing energy solutions in a short term. Its new-type turbo fuel stratified injection (TSI) and direct-shift gearbox (DSG) technologies are able to reduce oil consumptions by more than 20% on average.

Multinationals like BMW, Mercedes-Benz, and Fiat all have begun their research and development of diesel technologies, but are still eyeing on in consideration of government attitude.

Zhang Suixin, vice president of Volkswagen (China) Investment Co., Ltd., discloses that because the company does not know how long the supply shortage of diesel oil will last, and that its top executives are still discussing the promotion plans.

In mid-July, Volkswagen handed over more than 500 Touran hybrid cars to the Beijing Olympic Organizing Committee, announcing the product will be rolled out in 2010. It seems the auto giant is also considering providing solutions of other renewable energy, commented an insider.