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VW's 2 China partners cooperate -- to a point
BEIJING -- Volkswagen AG has finally gotten its two partners to cooperate -- a little. Each of Volkswagen's joint ventures showed a new model designed in China for China at Auto China 2008 in Beijing. The two cars are built on the same platform. They jointly developed the two models. But they only share some suppliers.
"It is always our intention to use the same suppliers, but it is not always possible," says Stefan Krauss, senior manager of the technical development division at Volkswagen Group China.
Volkswagen's two partners in China -- Shanghai Automotive Industry Corp. and China FAW Group Corp. -- each have their own supplier group. They prefer to use suppliers from their own group, he indicated.
About five years ago, Volkswagen formed a joint purchasing committee with representatives from each partner in an attempt to boost sourcing of components from the same suppliers.
Common sourcing reduces costs because suppliers can produce larger volumes and boost efficiency.
The two joint ventures combined produced close to one million vehicles in 2007.
Volkswagen needs to increase joint sourcing to remain competitive in the China market, which is characterized by falling prices, Krauss figures.
"We must make more pressure on the JVs so the price will be reduced," he says.
Volkswagen's goal is for the two ventures to buy 75 percent of their parts from the same suppliers, Joachim Wedler, first vice president at FAW-Volkswagen Automotive Co. said at the Automotive News China conference in Beijing on April 18.
Currently, only 20 percent are jointly sourced, he said.
The new models are the Lavida, produced at Shanghai Volkswagen Automotive Co., and the New Bora, produced at FAW-VW.
Both are built on the PQ34L platform. The "L" indicates that the platform has been stretched by 90 centimeters. The extra leg room is added to the rear seat to accommodate China's chauffeur-driven passengers.
Engineering for the two models was done at FAW-VW, Shanghai VW, and at Volkswagen headquarters in Germany, says Krauss. Volkswagen engineers also made frequent visits to each of the joint ventures, he says.
"It was a lot of time on planes," joked Krauss.
The Lavida will go into production in mid-2008, says Krauss. Production of the the New Bora will begin "a bit later."
Around 80 percent of the components for the two models will be sourced in China, he says.
"It is always our intention to use the same suppliers, but it is not always possible," says Stefan Krauss, senior manager of the technical development division at Volkswagen Group China.
Volkswagen's two partners in China -- Shanghai Automotive Industry Corp. and China FAW Group Corp. -- each have their own supplier group. They prefer to use suppliers from their own group, he indicated.
About five years ago, Volkswagen formed a joint purchasing committee with representatives from each partner in an attempt to boost sourcing of components from the same suppliers.
Common sourcing reduces costs because suppliers can produce larger volumes and boost efficiency.
The two joint ventures combined produced close to one million vehicles in 2007.
Volkswagen needs to increase joint sourcing to remain competitive in the China market, which is characterized by falling prices, Krauss figures.
"We must make more pressure on the JVs so the price will be reduced," he says.
Volkswagen's goal is for the two ventures to buy 75 percent of their parts from the same suppliers, Joachim Wedler, first vice president at FAW-Volkswagen Automotive Co. said at the Automotive News China conference in Beijing on April 18.
Currently, only 20 percent are jointly sourced, he said.
The new models are the Lavida, produced at Shanghai Volkswagen Automotive Co., and the New Bora, produced at FAW-VW.
Both are built on the PQ34L platform. The "L" indicates that the platform has been stretched by 90 centimeters. The extra leg room is added to the rear seat to accommodate China's chauffeur-driven passengers.
Engineering for the two models was done at FAW-VW, Shanghai VW, and at Volkswagen headquarters in Germany, says Krauss. Volkswagen engineers also made frequent visits to each of the joint ventures, he says.
"It was a lot of time on planes," joked Krauss.
The Lavida will go into production in mid-2008, says Krauss. Production of the the New Bora will begin "a bit later."
Around 80 percent of the components for the two models will be sourced in China, he says.
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