The parts costs may go up as FAW-Volkswagen

　　Though firstly denied, that FAW-Volkswagen will be building a new factory in Guangdong is no longer a secret since presently the corporation admitted initiatively. From Shunde to Zengcheng, Dongguan, Zhanjiang to Naihai, speculations of the media has been getting closer and closer to the truth.

　　It is clear that a new plant is similar to a flag planted by FAW-Volkswagen in the South China market dominated by the Japanese auto manufacturers so as to boost its market share there as well as to achieve it Strategy 2018 as soon as possible. After all, the total output of its two production bases Chengdu and Changchun was less than 700,000 units in the year of 2009. To achieve the sales and production goal of one million till 2018, expansion is inevitable.

　　From a national perspective, the market share of Volkswagen in the South China market is lower than that in other places while its potential there is the strongest. In 2008, the market share of Volkswagen in the South China market was only 12%, far lower than its national level of about 18%.

　　This event also means that, after the new plants of FAW-Volkswagen and Shanghai Volkswagen in South China are finished, Volkswagen will own production bases in large cities such as Shanghai, Changchun, Chengdu, Nanjing and Guangdong, which indicates the whole country will be filled with its flags. Meanwhile, whether it can succeed in China will determine the possibility for the auto market to top the global automotive industry.

　　Specifically, the logistics costs can be saved, the impact in Guangdong will be enhanced and supports from the local government can be also obtained by the company. However, obviously, there is still risk for FAW-Volkswagen to build a new plant in Guangdong.

　　First of all, since the influence of Japanese cars in Guangdong has not been built in one day, a new plant may not be able to shake the status of Japanese cars in the short term. Secondly, which type of products will FAW-Volkswagen bring to the South China market? In fact this is the most important issue. The well-known fuel-efficiency of Japanese cars has already impressed the consumers deeply. Despite of TSI and DSG, since the costs are not low, how can it seize the market?

　　The rumors said a new brand SEAT is one option. As a wholly owned subsidiary of Volkswagen, Spanish brand Seat mainly builds dynamic and personalized products based on the VW Group platform, which is highly consistent with the demand of South China market. In addition, as a totally new brand, market resistance the SEAT comes across will be relatively small.

　　However, in the early stage, some of the existing product line will definitely be introduced to South China in order that its Southern Strategy can rapidly take effect. The waiting time will be much longer and costs much higher if the auto marker waits the new SEAT brand to come.

　　Nevertheless, if the existing products are taken there, since most of surely FAW-Volkswagen’ parts and components manufacturers are in the northeast and eastern China, the logistics costs of the auto parts are likely to increase while that of the vehicles can be saved. Although new supplies can be founded later, undoubtedly, more efforts are demanded initially.

　　However, these small problems can never hold back the pace of Volkswagen to expand to the South. Compared to its Southern strategy and strategy 2018, perhaps these are all nothing.

　　It is noteworthy that, when news came clearly that Volkswagen will build new plants in Guangdong, the globally largest production base of Nissan is officially announced to be settled in Huadu.

　　Obviously, when the German auto manufacturer is launching an attack, the Japanese auto makers are never getting relaxed.

　　(Translator: Yalong/Jessie)

　　See original Chinese report Please click:http://chanjuanqian.blog.sohu.com/151263803.html