German automaker Volkswagen AG is retooling one of its factories in China to manufacture vehicles under its Audi brand. Reports citing government document sources revealed that Volkswagen and its Chinese joint venture parent SAIC Motor will be investing around 4.13 billion yuan or roughly $590 million to retool their manufacturing plant in Shanghai.
Once the retooling is complete, Volkswagen and SAIC's joint venture company, SAIC Volkswagen, will now be able to locally manufacture new Audi-branded vehicles. As of the moment, the joint venture only produces and sells vehicles under two of the Volkswagen's 12 different brands, namely its Volkswagen and Skoda brands. Volkswagen also owns other popular vehicle brands such as Bentley, Lamborghini, Porsche, and SEAT.
The same reports claim that Volkswagen and SAIC are aiming to have an annual manufacturing capacity of around 60,000 Audi-branded vehicles. The Shanghai plant will reportedly mainly be producing Volkswagen's Audi A7L, a luxury five-door luxury liftback sedan. Meanwhile, around half of the company's Shanghai production facility will be dedicated to manufacturing Volkswagen-branded sports utility vehicles (SUVs). The retooling of the joint venture's Shanghai manufacturing plant is expected to be completed by the end of this year.
Reports of the retooling come as demand for luxury vehicles continues to be stable in China. SAIC Motor chairman, Chen Hong, previously stated that they are planning to produce Audi-branded vehicles locally, with the first ones to roll out sometime in early 2022. However, the recent reports seem to indicate that both SAIC and Volkswagen may be moving up their timetables given the country's strong demand.
A source inside SAIC's investments department reportedly stated that the Audi project is proceeding normally and as planned. The source apparently did not give any further details on the plan.
China's car sales had experienced a massive decline over the first few quarters of this year, mostly due to the decrease in demand for transportation amid the coronavirus pandemic. However, SACI Motor had reported a slight recovery in its sales over the past few months. One of China's largest automakers revealed that it had managed to sell more than 479,000 vehicles in June, a 2.8 percent year-on-year increase. The company also stated that seven out of its 11 automotive subsidiaries had also reported sales growth over the same month.
Apart from SAIC Motor, other automakers operating in China have reported strong rebounds in sales over the past months. In June, Toyota reported a 22.8 percent year-on-year surge in sales, while Nissan reported a 4.5 percent increase. Domestic players such as Dongfeng Motor reported a 9.8 percent growth, while Geely Auto reported a 21 percent year-on-year increase.
