FAW-VW delays capacity expansion in Chengdu

Shanghai, February 3 (Gasgoo.com) Amid lingering economic recession, FAW-VW Automotive Company, a joint venture between FAW Group and Volkswagen AG, has suspended its plan to build a new plant for expanding capacity to 350,000 units in southwestern China's Chengdu city, said sina.com today. The project might be postponed to 2011.

The current Chengdu facility of FAW-VW has an annual capacity of about 20,000 units and mainly produces the VW Jetta. In 2008, FAW-VW's Chengdu plant made about 14,000 units of the Jetta and the output is expected to reach 18,000 units this year.

FAW-VW has planned to boost its Chengdu production capacity to 350,000 units by building there a new plant, and the 8.87 billion yuan ($1.3 billion) project has been approved by China's Ministry of Environmental Protection.

The new Chengdu plant will include four production lines from stamping, welding, costing to assembling. Its construction project is scheduled for completion within four years. But now the expansion project might not start until 2011.

FAW-VW planned to put its new Chengdu plant into production in 2010, with an initial capacity of 200,000 for both the Jetta and Sagitar cars. "The automaker has postponed its original plan, due to the gloomy economic outlook," said a supplier executive.

The joint venture has been making the Jetta in Chengdu since 2007 and will continue its Jetta production in this city even if the company has not decided yet when to start producing the second model there.