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Changan in talks with VW on joint venture

  • Source: Global Times
  • [15:21 May 19 2010]
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VW commercial vehicle

Changan Group Co Ltd and Volkswagen are at the table of negotiations for the possibility of a joint venture for the production and sales of Volkswagen's commercial models in China, according to China Business News, citing an anonymous source in Changan.

Changan light-van

"No agreement between the two companies has been made so far," the source said on May 18. "The Chinese automaker is looking to expand on the market through cooperations with international brands given that the company only has a history of producing commercial cars of its own brand."

Changan has applied for joint-venture establishments with Mazda and PSA, ever since it acquired the automobile assets of Changhe and Hafei last year.

At present, Changan owns light-van of Channa Star2, Starlight 4500, SC-series and along with Jiangling (Changan's JV) own light commercial vehicles, buses and engineering trucks.

Changan sold 1.863 million vehicles in 2009 and 691,000 units in the first quarter of 2010, but the ratio and sales are still inferior to its direct competitors, Chinese automakers Dongfeng Motor and FAW.

According to an analysis report from the Chinese Association of Automobile Manufacturers (CAAM), Dongfeng Motor's sales reached 268.526 billion yuan ($39.32 billion) in 2009 with a net profit of 26.258 billion yuan ($3.85 billion); FAW Group's sales reached 314.381 billion yuan ($46.04 billion)over the same period with a net profit of 25.862 billion yuan ($3.79 billion); Changan only reached 105.42 billion yuan ($15.44 billion) sales with 2.383 billion yuan ($0.35 billion)of net profit which is less than one tenth of the previous automakers.

China became the No.1 commercial vehicle market in the world, with commercial vehicle sales increasing 28.39 percent year-on-year in 2009 to 3.3135 million units, which is close to the total sales volume of all the vehicles sold last year in Japan.

Volkswagen sold 354,800 units of light-vans in 2009, down 20.7 percent from a year earlier.

Agencies and Shi Jierui contributed to this story