Two VW JVs in China to increase joint local sourcing

Shanghai, May 26 (Gasgoo.com) Volkswagen (VW) hopes to maintain its competitiveness in the Chinese market by enlarging joint sourcing. VW said recently that its two joint ventures (JV) in China would increase shared components purchase to 75%.

It is estimated that about 80% of the components will be sourced in China for the two models: Lavida, produced at Shanghai Volkswagen Automotive Co., and the New Bora, produced at FAW-VW. This just happens in the context of Toyota, GM, and Ford reducing auto parts quota in China

VW aims to increase to 75% of its two JVs' common sourcing , while at present only 20% are jointly sourced by the two arms of VW in the south and north China, said Stefan Krauss, senior manager of the technical development division at Volkswagen Group China.

It's previously reported that the strict control over technology by multinationals led to slow development of local components suppliers. "We are pleased to bring technology in China," said Winfried Vahland, CEO of VW (China). Through supports from components suppliers, VW hopes to cut 40% of its total costs.

Industry insiders hold different views. An automotive analyst said it didn't mean the number of local VW dealers would increase. As lots of small suppliers couldn't apply the new technology to their production and only boast small production capacity, VW will not adopt them. They will be possibly merged by big suppliers.