Volkswagen Extends Cooperation with First Automotive Works in China

Press Release

• Agreements to expand production signed
• Foundation stone for new components plant laid

Volkswagen has taken further important steps towards strengthening cooperation with its partner First Automotive Works (FAW) in Changchun, China.

Dr. Folker Weißgerber, Member of the Board of Management of Volkswagen AG and responsible for the China Region, and Dr. Bernd Leißner, President of Volkswagen Group China, together with Mr Zhu Yanfeng, President of the FAW Group, signed several agreements intensifying joint activities on 13 July 2004 in Changchun. The foundation stone for a new components plant was laid the next day.

Volkswagen holds a share of 60 % and FAW Group a share of 40 % in the newly-established joint venture named Volkswagen FAW Platform Co. Ltd., which will in future produce running gear components including rear and front axles for new models in the VW range such as the Caddy, Bora or Touran. The production facility in Changchun ensures a high share of locally-produced parts in vehicle manufacture at an early stage. Investment totals 1.42 billion RMB (149.5 million Euro) and vehicle production will commence at the end of 2005. The foundation stone was laid on 14 July 2004 in the presence of numerous representatives from industry and politics.

In a further joint venture also just established, advanced low-emission, low-consumption engines are to be produced from 2006 in the harbour city of Dalian. In line with Chinese automotive policy, this project makes an important contribution to environmental protection and preserves resources in China. The project is currently at the final governmental review stage.

In addition, a declaration of intent to expand the model range by a new product series with a view to strengthening the continued growth of FAW-VW was also signed.

The conclusion of a licensing agreement to build the VW Multivan and Caravelle marks entry into the Chinese market for light commercial vehicles. These models will be built in Jilin near Changchun under the present FAW-VW joint venture.

The investment required for these projects has been budgeted in the investment framework for VW activities in China until 2008 totalling some 5.3 billion Euro (based on the current exchange rate) already announced.

The Volkswagen Group in China

In 2003, Volkswagen Group sold around 36 percent more cars in China than in the previous year with around 697,000 vehicles from the Volkswagen and Audi brands. Volkswagen is involved in three joint ventures in China. The Volkswagen Golf, Bora and Jetta as well as the Audi A6 and Audi A4 models are produced at FAW-Volkswagen in Northern China. Shanghai Volkswagen (SVW) builds the Volkswagen Passat, Santana, Santana Variant, Santana 3000, Touran, Polo and Gol. Another joint venture assembles gearboxes for vehicles built by FAW-Volkswagen and SVW.