BEIJING - Volkswagen Group plans even greater investment in China, its second home market, to boost production capacity and strengthen its product offensive, said its CEO Martin Winterkorn in an interview at the Beijing auto show.

In the first three months, the top overseas passenger carmaker in China posted sales of 457, 000 vehicles on the mainland and in Hong Kong, up 61 percent compared with the same period of last year.

"Sales in the first quarter allows us to be more optimistic," said Winfried Vahland, president and CEO of Volkswagen Group China, adding that the company estimates even higher growth in China's overall passenger car market this year and aims to move faster.

But as Toyota faces massive recalls due to quality control problems after rapid expansion, some observers wonder whether similar troubles could hit Volkswagen, which aims to surpass Toyota to become No 1 in the world's automotive industry by 2018.

"We have double insurance to guarantee the quality inside the group - staff in the R&D department will check a car first and then pass it to people in the quality assurance sector for tests - to minimize the possibility of quality defects," said Winterkorn, adding that the company's management attaches great importance to product quality and will be informed immediately to discuss a solution if problems arise.

Winterkorn stated firmly that Volkswagen's products have the highest quality among all carmakers in China, an assertion he noted is supported by solid figures.

The company has a medium-term goal to sell 2 million cars a year in China, where it moved about 1.4 million vehicles in 2009.

Volkswagen's leading sales were reflected in its large number of models and huge floor space at the ongoing Beijing auto show.

The biggest exhibitor of the show brought a number of new models under its six marques - Volkswagen, Audi, Skoda, Bentley, Bugatti, Lamborghini - together with Porsche to occupy an entire hall of nearly 10,000 sq m.

Winterkorn said a successful enterprise has to be able to operate multiple brands. "Every brand has its own booth in the hall and its own image, while every brand inside the group has its headquarters, R&D center, independent sales network and market position, and we are seeking a synergistic effect."

The company announced its electric vehicle strategy for the Chinese market at the show, saying it will start local production of electric cars in the country between 2013 and 2014.

Volkswagen's China chief Vahland said the strategy is the first of its kind that the group tailor made for a specific country, which shows its ambition to lead in electric automobile technologies in China.

"Our future pure electric cars that go into mass production will probably be the Golf and the new small car Up!," said Winterkorn, noting that the company hopes to do something to help establish unified standard on electric vehicles globally.

The company also plans to equip compact and mid-sized models built in China with its hybrid technologies. The Touareg Hybrid recently unveiled in Europe will enter the Chinese market in early 2011.

Winterkorn pledged that China will have the same electric and hybrid cars as Europe since the demand of Chinese customers are almost the same as their European counterparts.

Volkswagen has already brought its TSI engines into local production in China. Next month its plant in northeastern coastal city Dalian will formally begin to produce DSG transmissions, one of Volkswagen's core technologies to increase fuel efficiency.

Vahland said that they decided just one day before the auto show to extend the guarantee period of DSG transmissions to 48 months and 150,000 km.

China Daily

(China Daily 04/26/2010 page18)