FAW VW to buy Chengdu FAW as 3rd VW plant

Shanghai, March 10 (Gasgoo.com) Yesterday, when FAW Group put up for sale its 100% stake in Chengdu FAW Co., Ltd. for 502.23 million yuan ($72.55 million), FAW VW, the group's subsidiary joint venture with Volkswagen AG, confirmed its decision to buy Chengdu FAW to make it VW China's third plant, Beijing Times reported today.  

Chengdu FAW Co., Ltd. was founded, first as China FAW (Chengdu) Co., Ltd., in the capital city of southwestern China's Sichuan province in October 2002, based on Sichuan Passenger Vehicle Factory. In 2005, Chengdu FAW became a wholly-funded subsidiary of FAW Group, or its Chengdu plant that started to produce FAW VW's Jetta sedans in July 2007. By February 29, 2009, the net assets of Chengdu FAW are evaluated at 481,905,000 yuan.

FAW Group has required that the buyer of its whole stake in Chengdu FAW should be a passenger-car maker in China with registered capital of more than 7 billion yuan and annual sales revenue of 80 billion yuan, and that the buyer should have specific, workable product development plan to ensure an annual output of more than 350,000 sedans by 2014.

An insider of FAW said that although FAW VW produced its Jetta sedans at Chengdu FAW, the national assets transfer procedures will be followed when Chengdu FAW is sold to FAW VW. By operating Chengdu FAW as Volkswagen China's third plant, FAW VW will boost its capacity further and its presence in southwestern China.

FAW VW has reportedly planned to expand the Chengdu plant. The new assembly line, set to operate in 2011, will be able make 200,000 Jetta and Sagitar sedans annually. Other models of FAW VW are expected to be produced in Chengdu, an executive of the joint venture said.

German auto giant Volkswagen AG currently operates two joint ventures in China – FAW VW and Shanghai VW, which are based in northeastern Chinese city of Changchun and eastern city of Shanghai, respectively.