VW: Major force as fledgling market matures

Editor's note: Confident about the outlook for growth in China, Jochem Heizmann, president and CEO of Volkswagen Group China, said he is looking forward to a closer and long-term partnership with his local teams as the carmaker has its largest-ever recall in China underway.

On the eve of the 2013 Shanghai International Auto Show, all 12 brands under the Volkswagen Group umbrella joined forces for Volkswagen Group Night, after which Heizmann sat with China Daily and shared his views on the group's history and future strategies in the world's largest auto market.

Q: This year marks the 30th anniversary of Volkswagen's presence in China. What are your thoughts on its development over the past three decades?

A: Together with our Chinese partners, we have managed to bring a full range of automobiles to the market here. I'm very proud to have had the chance to experience this development personally.

Although I worked with our operations in Germany for many years, I view the Chinese market the key to our global strategy.

Volkswagen has always been committed to providing high-quality innovative products and customer-oriented services to our markets.

At the same time, we are highly responsible to the environment and our employees.

Those are the remarkable achievements we have made in China over the past 30 years.

Volkswagen Group China is no longer the single-model manufacturer producing 30,000 units a year like when we first entered the Chinese market.

We now have a lineup of 70 models, 2,000 dealerships and 80,000 employees offering the best services to our customers in China.

As a top employer in the auto industry, we value our employee skills, commitment and ideas, which are the driving force for our overall success.

As well, we are the first carmaker to introduce dual-vocational education that combines theoretical knowledge with practical use and rich resources offered by the global academic network.

Q: In your view, what is the key to such success over the past 30 years?

A: Our joint ventures here have been extremely successful because we have built up a high level of trust and commitment with our partners like Shanghai Automotive Industry Corp and First Auto Works.

In addition, Audi has become part of FAW-Volkswagen to enhance our multiple brand strategy.

We are providing customized products with innovative technologies and we appreciate the trust our consumers have placed on us over the past 30 years.

Meanwhile, service quality is a byword for us.

Volkswagen has established its first training branch in Beijing, a milestone in our efforts to continuously improve customer satisfaction, the quality of the dealerships and the cultivation of talented people.

Founded in 2011, the training program issues the Volkswagen's universal academy certificate to participants, the first outside our German headquarters.

Q: You mentioned customer satisfaction. Recently Volkswagen Group China began the recall of 380,000 vehicles with the DSG transmission. Why did it take so long ?

A: First, as CEO of Volkswagen China and a representative of the Volkswagen Group, I would like to express sincere regret to our customers for any inconvenience caused due to the recall. And we have learned a lot from it.

The top priority for us is to ensure benefits to our customers.

That is why we have now established a division of experienced specialists at Volkswagen Group China in Beijing.

The division is to ensure the quality of our services and at the same time to respond to possible emergencies in the future.

We would like to see a continuous and active interaction between our group and relevant government organizations.

Q: We know that vehicles with a particular production date were recalled. What is the next step? Will Volkswagen still provide DSG models to the Chinese market?

A: The recall started on April 2 and is progressing smoothly according to plan.

We are committed to tackling any problems if car owners require us to do so. We would like to invite them to contact us by our hotlines and authorized dealerships.

On the other hand, DSG will remain a core technology of the Volkswagen Group so as to achieve our ambitious CO2 goals and significantly reduce fuel consumption.

Q: What can customers expect from Volkswagen in the future?

A: We will maintain our close partnership with our joint ventures, providing advanced technologies and achieving our goal for 2018.

As a key global player in the auto industry, we aim to offer first-class consumer services and regionally tailored models.

To become the most innovative and responsible automaker, we are continuing our efforts to expand global production and regional dealerships.

This year is very important for Volkswagen.

We intend to have a higher growth rate than the market average, and will continue to strive to be the most sustainable car manufacturer in China.

Meanwhile, we will produce new models for the market and expand our distribution network to second-and third-tier cities in China. We have already started to expand existing facilities and build new plants in western China.

Q: Are you concerned that Volkswagen has too many models in this market?

A: We have the right vehicle to meet every customer's demand. We have also achieved the balance between premium and volume models.

Of our 70 models in China, some 20 are locally produced, including Audi and Skoda. In three years, we will have more than 90 models on the Chinese market.

We think that new models specially designed for Chinese customers are very important. We are ready for the challenges ahead in terms of customer expectations and market demand.

Moreover, we have 2,500 R&D engineers working in China, most of them with our joint venture partners.

They are able to meet the diverse needs of our Chinese customers.

The recently opened Audi R&D Center China, which has 300 engineers creating research designs and future technologies for the markets in China and Asia.

We think that Chinese customers have a major influence on new trends - not just in Asia but also for the entire world.

Q: The growth in China's auto market has slowed in recent years, but Volkswagen has registered healthy growth. What was the group's performance in the first quarter of this year?

A: Volkswagen Group has made a solid start in 2013. A total of 770,000 cars were sold between January and March, a year-on-year increase of 21.3 percent.

China will continue to be a crucial market for all brands from Volkswagen Group. We fully acknowledge that customer satisfaction is a key pillar for sustainable growth and our future development.

We are ready to listen carefully to customers' needs and demands.

Q: Sustainable development has become a hot topic for all big organizations. What is your view?

A: The issue of sustainable development is not only crucial for big enterprises, but also for society as a whole.

Volkswagen Group's will invest some 9.8 billion euros ($12.8 billion) in its Chinese joint ventures over the next three years, more than two-thirds of it related to sustainability.

Seven new vehicles and component plants will be put in operation in the near future to ensure environmental protection. They all meet the ISO 14001 standard.

Moreover, Volkswagen Group is committed to sustainable production in all our locations.

This year, we are scheduled to start seven cutting-edge paint shops. Each of the new paint shops has reduced water use by 90 percent and cut 10,000 tons of carbon dioxide.

And Volkswagen Group China's other outstanding environmental achievements include the Lighthouse in Foshan, which received the Triple Star Green Building Award, the highest rating possible.

Volkswagen also invested 3.5 million euros in its first bio-membrane wastewater recycling facility.

Q: Alarming PM 2.5 readings have raised public awareness about auto pollution. What is Volkswagen's solution to reduce car emissions ?

A: Volkswagen Group has dedicated considerable resources and energy to developing hybrid and electric technologies.

In the Chinese market, we are joining our partners to develop environmentally friendly technologies.

With their cleaner, fuel-efficient TSI combustion engines, a total of 26 models from Volkswagen, Audi and Skoda are eligible for government subsidies.

We plan to offer electrified vehicles by 2014 or 2015 that are locally produced by our joint ventures in China.

The main parts of those models will come from the Europe. And the rest will be produced by local vendors in China.

A hybrid concept car will be on display at the Shanghai Auto Show this year.

But we are not betting everything on the e-mobility card.

With innovative technologies, we can significantly improve fuel consumption and reduce emissions in all models.

We aim to reduce carbon emissions in volume models without sacrificing driving pleasure.

In sum, the Volkswagen Group has reinforced an integrated approach to improve fuel efficiency to meet public demands for environmental protection.

Q: What is Volkswagen China's social responsibility?

A: As a responsible corporate citizen, Volkswagen Group China is striving to pursue sustainable development to become a "green" automaker in China.

In addition to innovative technologies and high efficiency, we have also initiated programs such as the Volkswagen Green Future Environmental Education Initiative, a large-scale environmental program to popularize the concepts of eco-awareness among young students.

Organized by the Center for Environmental Education and Communications and Volkswagen Group China in 2007, it provided classes on eco-friendly lifestyles and the environment to students from 2007 to 2011.

During the 12th Five Year Plan (2011-15) period, Volkswagen will continue to bring the concepts of environmental education to help young Chinese people develop a deeper love for nature.

Though a history of 30 years is not a long presence, we have experienced profound changes and dynamic growth in the Chinese auto industry.

And we think that sustainability and responsibility will be the guidelines of our activities, now and in the future.