JAC drives ahead with­VWtie-up

Chi­nese auto firm to es­tab­lish new-en­ergy ve­hi­cle joint ven­ture with the Ger­man au­to­mo­bile gi­ant

China Daily (USA) - - BUSINESS - By LI FUSHENG li­fusheng@chi­nadaily.com.cn

Ger­man car­maker Volk­swa­gen AG is to set up a 50:50 joint ven­ture on new-en­ergy ve­hi­cles with China’s An­hui Jianghuai Au­to­mo­bile Co, ac­cord­ing to a mem­o­ran­dum of un­der­stand­ing the two signed in Ger­many on Wed­nes­day.

The two have agreed to en­ter into dis­cus­sions to eval­u­ate the per­spec­tives and fea­si­bil­ity of a new joint ven­ture that will fo­cus on re­search, man­u­fac­tur­ing and sales of new-en­ergy ve­hi­cles and spare parts, said Volk­swa­gen in an e-mail to China Daily.

De­tails such as the time­frame have yet to be spec­i­fied but the two au­tomak­ers aim to sign a for­mal agree­ment on their part­ner­ship within five months, as laid down in the MOU.

JACis one of the ma­jorChi­nese car­mak­ers with­out a for­eign part­ner. It de­liv­ered 333,639 ve­hi­cles and chas­sis in the first six months of 2016, 14.15 per­cent growth year-on-year.

The ini­tial con­tact be­tween the two car­mak­ers started af­ter Premier Li Ke­qiang’s visit to JAC in Oc­to­ber 2015. Chi­nese me­dia re­ported that JAC told Li of its in­ten­tion to work with Volk­swa­gen, and Li agreed to con­vey the mes­sage.

Zhang Zhiy­ong, an in­de­pen­dent auto an­a­lyst in Bei­jing, said JAC will gain from the move.

“JAC is betting big on newen­ergy ve­hi­cles to boost its per­for­mance, so it has long shown a strong in­ten­tion to join forces with in­ter­na­tional au­tomak­ers so that it can gain fi­nan­cial and tech­no­log­i­cal sup­port.”

JAC sold 9,720 new en­ergy ve­hi­cles in the first half of the year, surg­ing 261 per­cent year-on-year, ac­cord­ing to its mid-year fi­nan­cial report.

Ex­perts be­lieve the move will also help to pro­mote Volk­swa­gen’s e-mo­bil­ity strat­egy, as China has be­come the world’s largest new-en­ergy ve­hi­cle mar­ket.

The au­tomaker said in June that it in­tends to de­velop Matthias Muller, more than 30 new, purely bat­tery-pow­ered elec­tric ve­hi­cle mod­els by 2025 world­wide, with an­nual sales reach­ing two to three mil­lion units.

Matthias Muller, Volk­swa­gen’s CEO, told China Daily in an ear­lier in­ter­view that “China will be the fastest­grow­ing mar­ket for NEVs world­wide, and Volk­swa­gen aims to be at the fore­front of elec­tri­fy­ing China”.

How­ever, John Zeng, man­ag­ing di­rec­tor of LMC Au­to­mo­tive Con­sult­ing Shang­hai, said set­ting up a new joint ven­ture is “not that nec­es­sary”.

He said it can ar­range newen­ergy ve­hi­cle pro­duc­tion in its ex­ist­ing fa­cil­i­ties, but he ad­mit­ted that a new part­ner­ship ded­i­cated to purely elec­tric cars would be eas­ier to man­age.

Volk­swa­gen now has two joint ven­tures in China, one with FAWGroup and the other with SAICMo­tor, and both of them spe­cial­ize in pas­sen­ger cars.

The fact raises the con­cern of how Volk­swa­gen and JAC would spec­ify the na­ture of their co­op­er­a­tion as one in­ter­na­tional au­tomaker is now al­lowed to have no more than two part­ners in the same cat­e­gory in China.

Zhang said if the deal gains the nod from the au­thor­i­ties, it may sig­nal a change in au­to­mo­tive poli­cies, in­clud­ing whether China should al­low in­ter­na­tional car­mak­ers to have more part­ners and whether it should lift the 50 per­cent cap on for­eign own­er­ship.

China will be the fastest-grow­ing mar­ket for NEVs world­wide.” CEO Volk­swa­gen’s


Work­ers on the pro­duc­tion line at An­hui Jianghuai Au­to­mo­bile Co in He­fei, An­hui prov­ince.

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