VW's trends in China (Part 1): Production set to expand significantly through 2017

Capacity plans for cars and powertrains reflect continued growth in the region



VW's PC production volume in China and of its shares Volkswagen Group of Germany including Audi and SKODA, Germany, has been steadily increasing its passenger car (PC) market share in China since 2010 (on the wholesale/factory shipment basis), achieving 18% in the January-September 2013 period and approaching to the 2020 target of 20%.

 In September 2013, VW predicted the overall passenger car demand in China in 2020 as approx. 20 million units. The company then set its market share target as 20% on the wholesale/factory shipment basis, which is namely approx. four million units. This is twice as many as its sales target for 2018 announced in VW Group China's "Strategy 2018," its mid-term business plan for China launched in February 2009.

 This report compiles the latest developments of VW Group China's local production of complete passenger cars and powertrains such as engines and transmissions.

 MarkLines plans to issue shortly the second report on VW Group China's business plans and latest trends in sales operations.


Related Reports:


VW Group China's passenger car production volume


2007 2008 2009 2010 2011 2012 Jan.-Sep.
VW Group China's total production volume 955,960 975,000 1,387,327 1,900,076 2,196,223 2,624,841 1,969,645 2,328,961
   Shanghai VW 466,139 494,178 716,560 1,017,249 1,178,421 1,281,957 982,450 1,193,407
FAW-VW 489,821 480,822 670,767 882,827 1,017,802 1,342,884 987,195 1,135,554
Total passenger car production volume in China 15.0% 14.5% 13.4% 13.7% 15.2% 16.9% 17.3% 18.0%
VW's share in the total passenger car production in China 6,381,116 6,737,745 10,383,831 13,897,083 14,485,326 15,523,658 11,367,320 12,927,096



To expand complete vehicle production capacity to 3.8 million units in 2015

 In order to further increase sales, the VW Group has been accelerating its efforts in boosting production capacity by building and improving passenger car plants in the western region, where the Chinese government provides benefits to investors, and in the southern region, where Japanese OEMs hold large market shares. It has revealed the mid-term plan to expand the annual capacity from current over 3.1 million to 3.8 million units in 2015 and to almost five million units in or after 2017.

 (The Group's expansion plan for local production capacity announced in May 2013 as well as in September 2013, however, was to achieve four million units in 2018.)

 Shanghai Volkswagen Automotive Co., Ltd. (Shanghai VW), VW Group's joint manufacturing company with Shanghai Automotive Industry Corp. (SAIC), plans to build/expand plants in Yizheng, Jiangsu Province; Ningbo, Zhejiang Province in the eastern region; and in Urumqi, Xinjiang Uyghur in the western region. It plans to boost the annual capacity from current 1.55 million units to approx. two million units in 2015 and further to 2.76 million units in or after 2017.

 FAW-Volkswagen Automobile Co., Ltd. (FAW-VW), VW's joint manufacturing company with FAW Group Corp., expanded the existing Chengdu plant in Sichuan Province, western China. The company also started operations at a new plant in Foshan near Guangzhou, Guangdong Province, where Japanese OEMs are concentrated. It plans to raise the annual capacity from current 1.6 million units to 1.8 million units in 2015 and to 2.1 million units by 2016.

 In addition, FAW-VW suggested a possible plant construction project to produce a VW brand sports utility vehicle (SUV) model, depending on its selling situation. (Reported in September 2013 based on the interview with General Manager Zhang Pijie at the opening of its new Foshan plant.)


VW Group China: Complete vehicle production volume and capacity at joint-venture plants

(thousands of units)
Production model Production volume Annual production capacity plan
2012 Jan.-
As of the
end of
Oct. 2013
After expansion
(planned year)
Shanghai (Anting)
first plant
Polo, SKODA Fabia 1,282 983 1,193 300 1,200
(no expansion plan)
second plant
Lavida 300
third plant
Passat Lingyu, Tiguan,
Touran, Octavia, Superb
Nanjing plant
(Jiangsu prov.)
Santana (including the model of Vista),
All-new Passat,
New Lavida
Yizheng plant
(Jiangsu prov.)
New Polo, All-new
Santana, SKODA Rapid,
(SKODA Yeti will be added)
300 360
Xinjiang plant All-new Santana
(Cross Lavida will be added)
50 300 (future plan)
Changsha plant
(Hunan prov.)
(one new model in C segment, and two in D segment) (Construction started in May 2013.
Operations to start in 2015.
The second phase construction to commence in 2017)
- 300 (in or after May 2015)
→600 (in or after 2017)
Ningbo plant
(Zhejiang prov.)
(SKODA Superb, Octavia, and so on) (Construction started in January 2012.
Operations to commence by 2014.)
- 300 (in or after 2014)
Total 1,282 983 1,193 1,550 Over 1,850 (in or after 2014)
→ 2,000 (in 2015)
→ 2,760 (in or after 2017)
FAW-VW Changchun plant
(two plants)
VW, Audi brand model 1,343 987 1,136 900 1,440
(no expansion plan)
Chengdu plant
(first phase)
Jetta/All-new Jetta
(including CNG model, a kind of alternative model car)
Chengdu plant
(second phase)
New Sagitar
Chengdu plant
(third phase)
All-new Jetta 190
Chengdu plant
(forth phase)
N/A (in planning) 60 (in 2015)
Foshan plant
(first phase)
7th-generation Golf, Golf A7 (in early  2014, new Audi A3 will be added) 150-200 300-360 (in or after 2013)
→ 600-720 (by 2016)
*Note: including Audi brand models' capacity for over 150 (in 2015)
Total 1,343 987 1,136 1,590-
Over 1,800 (in 2015)
→ over 2,100-2,160 (by 2016)
*Note: including Audi brand models' capacity for over 700 included (in 2015)
Grand total
(total of VW Group in China)
2,625 1,970 2,329 3,140-
3,440-3,490 (in or after 2014)
→ over 3,800 (in 2015, including Audi brand models for over 700)
→ 4,100-4,160 (by 2016)
→ 4,860-4,920 (in or after 2017)

Sources: Publicity materials by VW China, Shanghai VW and FAW-VW as well as media reports.


Shanghai VW plans to boost annual production capacity to 2.76 million units in or after 2017

Xinjiang plant started producing the all-new Santana almost a year and a half ahead of schedule with annual production capacity of 50,000 vehicles
 Shanghai VW completed the first phase construction of Shanghai Volkswagen Automotive (Xinjiang) Co., Ltd. at Urumqi, Xinjiang Uyghur (Toudunhe-District, Urumqi Economic & Technological Development Zone) and started producing the all-new Santana in August 2013. The plant commenced operations a year and four months ahead of the end of 2014, the original schedule announced in May 2012.
 The site area is 407,700 square meters. The total construction investment is approx. CNY 2 billion. Facilities include body/painting/assembly shops. The annual production capacity in the first phase is 50,000 units, which might be increased to 300,000 units. Small to mid-size models suitable for the western China market including the new Cross Lavida, a small crossover, will be added to the production lineup.

Ningbo Plant to manufacture SKODA brand models from early 2014
 In January 2012, Shanghai VW commenced construction of a plant in Ningbo, Zhejiang Province, tentatively named as Shanghai Volkswagen Automotive Ltd. Ningbo Branch. Its completion and production startup are scheduled for early 2014 or the end of 2013 if all goes smoothly. The annual output capacity is 300,000 vehicles. It is positioned as a plant mainly to eliminate a capacity shortage for the SKODA brand models.
 Facing the Yangshan port in the suburb of Shanghai city, the Ningbo plant is located at Hangzhou Bay New District in Ningbo, Zhejiang Province, about an hour and a half drive from both Shanghai Pudong International Airport and Shanghai Hongqiao International Airport. Investment in the plant construction will total CNY 11,795 million. As of April 2013, the plant was in the phase of pilot production of the Vorserien-Freigabe-Fahrzeuge (VFF: pre-production vehicles for approval).

* Note: According to the press release by Shanghai VW on October 25, 2013, the company's Ningbo plant started operations and rolled off its first model, the SKODA Superb on October 24, 2013.The plant's annual production capacity for the first phase will be 300,000 units. The first phase construction of the plant is expected to be completed at the end of 2014 or early 2015.

Changsha Plant to complete first phase construction in 2015 to provide 300,000 units/year capacity, 600,000 units in the future
 In May 2013, Shanghai VW undertook the first phase construction of Shanghai Volkswagen Automotive Ltd. Changsha Branch, a new plant in Changsha, Hunan Province. Pilot production is scheduled to begin in March 2015 and official production is to start in May 2015.
 The plant is located at Ganshan Town, Changsha Economic & Technological Development Zone, Changsha city. The site area is 1.38 million square meters and the construction investment will total CNY 12.08 billion. In addition to stamping/welding/painting/assembly shops, an R&D center will be built. The first phase construction is to be finished in 2015 with the maximum output capacity of 300,000 vehicles/year. Shanghai VW also considers expanding the capacity to 600,000 units/year after the second phase to be commenced around 2017.
 It has been reported that the new Changsha plant would manufacture a C-segment sedan (product code: SK371CS/the new SKODA Octavia, according to some reports) as well as two D segment models. At the time of opening, the automation rate of production lines will be over 70%. The target output volume for 2015 is 54,200 units consisting of 37,500 units of a C-segment sedan and 16,700 units of a D segment model. In 2017, 65,400 units of another D segment model will be added. The total output will be increased to 300,000 units, together with 179,200 units of the C-segment sedan and 55,400 units of the first D segment model.

Yizheng Plant started in July 2012 with 300,000 units/year capacity
 Prior to the Changsha plant, Shanghai VW started in July 2012 operations at Shanghai Volkswagen Automotive Ltd. Yizheng Branch, the Yizheng plant in Jiangsu Province, with production of the new VW Polo. With the flexible manufacturing system, the annual production capacity is 300,000 units, which can be increased up to 360,000 units.
 Two models were added for production: the all-new VW Santana at the end of 2012 and the new SKODA Rapid in July 2013. SHANGHAI VW plans to mainly manufacture new models based the VW PQ25 platform, including the SKODA brand models.
 Construction investment in the Yizheng plant totaled CNY 9.1 billion. The site area is 1,280,500 square meters and the building area is 502,000 square meters. Facilities for R&D, training and distribution of complete vehicles/parts & components were built in addition to stamping, welding, painting and assembly. The initial employees were approx. 2,000, which will be increased to over 3,000.
 As of July 2013, two stamping lines, 388 welding robots and 123 painting robots were installed. The automation rate of the welding process was 70.72%. The automation ratio of the painting process, where the fourth-generation Ecopaint RoDip system was adopted, reached 85%. Vehicle suspension devices capable of free lifting and lowering, delivery frames and the module assembly system were also introduced.

Nanjing Plant expands capacity to 300,000 units/year
 Shanghai Volkswagen Automotive Ltd. Nanjing Branch, Shanghai VW's plant in Nanjing, Jiangsu Province inaugurated in April 2008, boosted annual production capacity from initial 60,000 units to 300,000 units in September 2013. The former Santana, the Santana Vista, the new Passat and the new Lavida are manufactured.


FAW-VW to raise annual production capacity to 2.1 million units by 2016

Foshan Plant started operations in September 2013, to establish maximum capacity of 720,000 units/year including 150,000 Audi brand cars.
 In September 2013, FAW-VW completed the first phase construction of FAW-Volkswagen Automotive Ltd. Foshan Branch, its plant in Foshan, Guangdong Province. The plant started production of the seventh generation Golf "Golf A7" equipped with the 1.4-liter TSI turbo-engine. Future plans for early 2014 include other Golf A7 models (with the 1.2-liter TSI turbo-engine, the 1.4/1.6-liter MPI naturally aspirated engines and the 1.4/1.6-liter TSI turbo-engines) and the new Audi A3. New energy vehicles will also be added after the second phase construction. The Foshan plant had also been considered as a production facility of VW Group's SEAT brand vehicles.
 The initial capacity after the first phase construction is 150,000 vehicles/year, which can be raised up to 200,000 units with extra hours, with 6,500 employees. It will soon be raised to 300,000 units/year (up to 360,000 units with extra hours) with 10,000 employees. The initial automation rates are over 80% at the stamping shop producing aluminum parts and over 70% at the welding shop with 800 robots. Six fully automated welding lines have been introduced as main welding lines. Operating days per year at the plant are set as a little over than 300.
 As of September 2013, the Chinese government has already authorized the second phase construction, which will commence by the end of 2013. The completion of the second phase is scheduled for 2016 or the end of 2015 at the earliest. Together with the first phase, the annual production capacity will total 600,000 units or 720,000 units at maximum. This will include 150,000 units/year capacities for the Audi brand vehicles and the Audi production capacity in China will then be increased to 700,000 units/year.
 The site area is over one million square meters. The construction investment will total CNY 28.6 billion: CNY 13.3 billion in the first phase and CNY 15.3 billion in the 36 months-long second phase construction. In the meantime, the 1.4-liter TSI engines for the Golf A7 manufactured at the Foshan plant are supplied from the engine facility of FAW-VW Chengdu Branch. The engines will be replaced by those made at its own engine plant to be built at the Foshan Branch.

Changchun Plant to start a new painting line for the Audi
 FAW-VW revealed in July 2013 its plan to further upgrade production facilities with new technologies at the Audi lines in Changchun. In addition to the already working new painting line, stamping, welding and assembly lines will be gradually improved.
 In April 2013, FAW-VW Changchun plant started the new painting line at the Audi production facility. (Construction had started in April 2011.) The painting shop is 27,300 square meters and the total area of the four-story building is 56,700 square meters. The painting capacity is for 150,000 vehicles/year. The line built based on Audi's global-highest quality standards will be used mainly for the C-segment Audi brand cars.

Chengdu Plant completes third phase construction
 In January 2013, FAW-VW completed the third phase construction at FAW-Volkswagen Automotive Ltd. Chengdu Branch, its plant in Chengdu, Sichuan Province, and expanded the capacity to 540,000 units/year. The fully remodeled Jetta will be manufactured at the plant from March 2013. After the fourth phase construction, the annual production capacity might be expanded to 600,000 units.
 The total construction investment through the third phase was CNY 16.3 billion. CNY 7.2 billion was invested only in the third phase, which included stamping/welding/painting/assembly shops and a distribution center. The combined site area of the first and second plants built in the first and second phases is 810,000 square meters. The combined annual production capacity is 350,000 units, mainly for the previous Jetta and the new Sagitar. In the meantime, the plant will be engaged in production of VW's C/D segment vehicles including vehicles using compressed natural gas (CNG) as an alternative fuel.
 From raw materials procurement through completed vehicle shipment, the Chengdu plant will adopt the VW's global standard systems. The dry separation technology is introduced in the painting process, which saves energy and water. The welding process adopts the laser system.


SEAT focusing on brand visibility boost

 VW has been accelerating research and verification on local production of the SEAT brand vehicles in China, especially about the level of brand recognition. It was reported that a new research started on this issue in October 2013. The OEM planned to replace imports by locally produced vehicles for the China market by 2015 and the Foshan plant was the most possible production facility.
 While the SEAT brand sold a total of 2,200 vehicles in 2012, it only sold a total of 771 units of three models of the Leon/Alhambra/Ibiza in the January-September period of 2013. The SEAT brand, which has resumed import sales from March 2012 and planned to start local production again, is suffering from unexpectedly low sales. It is inevitable to postpone the local production that was considered in the near term.
 The person responsible for the SEAT brand's business in China revealed in October 2013 the brand's policy to be patient about sales expansion in the next three to five years from 2013 and to focus on building the brand and establishing its image in China.



Powertrain production facility Shanghai VW to increase lines for eco-engines

 VW plans to increase the annual passenger car production capacity in China from current 3.1 million units to 3.8 million units in 2015 and almost to five million units in the medium term. Along with this plan, it has been accelerating its efforts to increase and upgrade production facilities in China for vehicle engines and transmissions.

 For engines with less than 1.6-liter displacement to be produced in China, VW plans to replace the current cast iron engines of the EA111/EA113 by the new aluminum engine of the EA211. It will therefore proceed with renovation of the existing Shanghai plant for new model production and concurrently with new engine facility construction at Changchun, Jilin Province, Chengdu, Sichuan Province or Foshan, Guangdong Province.

 Production capacity of the third-generation EA888 series 1.8/2.0-liter gasoline engines has been increased in Changchun, Jilin Province, Dalian, Liaoning Province and Shanghai City through new plant/line construction and renovation.

 As for transmissions, production capacity will be increased for the eco-friendly MQ200 manual transmission (MT) paired with the new EA211 engine, whose production will be increased. The Changchun plant, which started the new MQ200 MT line after the Shanghai transmission plant, will further raise the transmission production capacity. VW is increasing production capacity of the DSG dual-clutch transmission on its own by upgrading the existing Dalian plant and by building a new plant in Tianjin.


VW Group's major engine/transmission plants in China

Major engine plant investment
Main product Annual capacity
(1,000 units)
Local engine company in China Jiading engine plant included Shanghai VW First plant VW Group 60%,
SAIC 40%
EA888 engine (1.8/2.0TSI)
(produced from March 2010)
(at the end of 2012)
Second plant EA827 and EA113 engine
Third plant EA888 engine (1.8/2.0TSI) 450
(at the end of 2012)
Shanghai Volkswagen Power Train Company First-phase plant VW Group 60%,
SAIC 40%
EA111 engine (1.4/1.6L, 1.4/1.8/2.0TSI), and EA211 engine (1.4/1.6TSI) Over 700
(in October 2013)
(Produced 709,000 engines for its own vehicles in 2012)
Second-phase plant
Third-phase plant
FAW-VW Changchun Engine and Transmission factory
(Powertrain plant included FAW-VW)
Existing plant VW and Audi 40%,
FAW 60%
EA111 and EA113 engine (1.4/1.6L, and so on) 450 (in October 2013)
→ (to be transferred in the future)
New plant (EA211 engine) 450 (from 2014)
→ 600 (future)
Engine plant included FAW-VW Chengdu Branch Engine plant EA211 engine 600 (in 2013)
Engine plant included FAW-VW Foshan Branch Engine plant (EA211 engine) (Under consideration/Construction not started as of October 2013)
Volkswagen FAW Engine (Dalian) Company Dalian main plant VW 60%,
FAW 40%
EA888 engine (1.8/2.0TSI) 300 (in August 2013)
Dalian new plant (3rd-generation EA888 engine, and EA288 diesel engine) (Expansion plan announced in August 2013. To be launched in 2015)
Changchun branch plant 3rd-generation EA888 engine 300 (in October 2013)
→ 450 (around June 2014)
Main transmission plant Investment ratio Main product Annual capacity
(1,000 units)
Local transmission company in China Volkswagen Transmission (Shanghai) Co., Ltd. Joint plant VW 60%,
SAIC 20%,
FAW 20%
MQ200 MT N/A
(Produced over 415,000 transmissions in 2011)
FAW-VW Changchun Engine and Transmission factory Existing plant VW and Audi 40%,
SAIC 60%
Renovated into Audi's distribution warehouse
(Production of the O2K MT discontinued and the MQ250 MT to be transferred to the new Changchun MT plant)
New Changchun MT plant MQ200 MT
(To accommodate MQ250 MT production)
Volkswagen Automatic Transmission (Dalian) Co., Ltd. VW Group 100% VW 100% Dual-clutch transmissions including the DQ200 7-speed DSG first phase: 300
second phase: Construction started in 2012.
third phase: Construction approved by the government in December 2010 in the planning phase as of July 2013.
Volkswagen Automatic Transmission (Tianjin) Co., Ltd. New DSG plant VW 100% The new DQ350/DQ500 DSG and others First phase: 450 (in or after 2014)
SAIC Motor Corp. Transmission Co., Ltd. Shanghai VW's supplier for transmission and component parts SAIC 100% AT In 2011, combined output for Shanghai VW and Shanghai GM was 228,000 units.


Engine production plants accelerating capacity increase for fuel-efficient engines


Shanghai VW: After constructing three engine plants on the same property as Loutang plant, annual output capacity expanded to 750,000 engines.
 Shanghai VW completed the third phase construction of the Loutang engine plant on the same property in the suburb of Shanghai to produce 450,000 units of the EA888 around the end of 2012 , according to the media. Construction had started in December 2011. With the fist, second and third plants combined, the Loutang plant has increased the production capacity to 750,000 units/year.
 The third plant site area is 200,000 square meters and its building area is 49,000 square meters. The total investment was approx. CNY 2,696 million. The plant includes the machining facilities for components of the EA888 engine such as cylinder blocks, cylinder heads, crankshafts and connecting rods as well as the engine assembly facilities.


Shanghai Volkswagen Powertrain Co. to increase EA211 production with annual capacity expanded up to 1.53 million units in 2015
 Shanghai Volkswagen Powertrain Co., Ltd., a joint venture with Shanghai Automotive Industry Corp. (SAIC), renovation and capacity expansion works of its existing first-phase plant around the end of 2012. The plant is located in Loutang Town, Jiading District, Shanghai and will exclusively produce the EA111 cast iron engine. The plant with the annual production capacity of 300,000 engines will be converted into one to manufacture 450,000 units of the new EA211 aluminum engines per year in March 2015.
 There will be no new building construction nor site expansion. However, approx. CNY 1 billion will be invested in providing facilities for the EA211 engine production including five lines of machining and assembly processes for cylinder blocks, cylinder heads, crankshafts and connecting rods. The production of the old EA111 engine will be discontinued and pilot production of the EA211 is scheduled to start in December 2014.


 Shanghai Volkswagen Powertrain Co., Ltd., the joint venture engine-manufacturing subsidiary, has totaled the EA111 series production capacity to 600,000 engines/year in 2011 after the first phase and the second phase (300,000 units/year) construction. The second phase plant was refurbished around 2012 to introduce the flexible manufacturing system and add production of the EA211 turbo-charged aluminum engines.
 In 2011, the third phase construction started at this JV, which had production capacity of 700,000 engines/year (780,000 engines at maximum). The third phase plant commenced operations in 2013 and the combined capacity of the three plants has been boosted up to 1,025,000 engines/year. After March 2015, the total annual production capacity will reach 1.53 million engines, after renovation of the first plant is completed. At the same time the subsidiary plans to increase its employees from current 1,500 to 2,087 by the end of 2013.


FAW-VW accelerating expansion of EA211 output capacity at adjacent engine plant
▽Construction of EA211 engine line commenced at Changchun powertrain plant
 In May 2013, FAW-VW's powertrain plant, located at the same site of its headquarters in Changchun, started building another plant to manufacture VW's EA211 engines. The new plant's site area, adjacent to the existing plant, is 124,000 square meters. Its production capacity in the first phase will be 450,000 units/year,which will be raised to 600,000 units after the second phase.
 The EA211 engine will be mounted on the VW/Audi brands' C-segment models manufactured by FAW-VW, including the VW new Jetta/Sagitar/new Bora, the Audi Q3/A3 and the Foshan plant-made Golf A7. Two models of the EA211, the 1.6-liter MPI naturally aspirated engine and the 1.4-liter TSI turbo-charged engine will be manufactured in the beginning. The 1.0/1/2-liter TSI turbo-charged EA211 and the 1.4-liter MPI naturally aspirated EA211 as well as a hybrid engine will be added to the lineup. The construction investment will total CNY 2.3 billion.
▽FAW-VW Chengdu powertrain plant to increase annual production capacity to 600,000 units
 In October 2012, FAW-VW completed the first phase construction of its powertrain plant located at the same site of its Chengdu plant and started producing the EA211 series engines. The groundbreaking was in July 2011. Although the JV announced the second phase construction would be completed in March 2013, the progress has not been reported as of October 2013.
 The output capacity in the first phase is 450,000 engines/year, which was supposed to be increased to 600,000 units/year after the second phase. The progress, however, is unknown. The construction investment in the first phase was CY 2.8 billion. The site area is 160,000 square meters.
▽FAW-VW plans another EA211 engine plant in Foshan
 The FAW-VW is planning to build a new engine plant for the EA211 aluminum engines to be mounted on the C-segment cars at the Foshan branch in Guangdong Province. The prestigious National Business Daily on May 25, 2015 and other news media reported as information from an FA-VW insider. Details have not been revealed yet.
▽FAW-VW developing fuel-efficient internal combustion engine for next-generation flagship passenger car
 FAW-VW revealed in July 2013 that it is developing a new fuel-efficient internal combustion engine for its next-generation flagship passenger car, jointly with Audi. The engine will be produced at FAW-VW Changchun powertrain plant. Reportedly, the fuel efficiency of this flagship car, also adopting Audi's module technology, will be improved by 18% compared to the previous model.


VW-FAW Engine (Dalian) builds new plants in Changchun and Dalian to increase capacity for third-generation EA888 engine
▽VW-FAW Engine (Dalian) Changchun Branch commenced EA888 production, to boost capacity to 450,000 engines/year by mid-2014
 Changchun branch of Volkswagen FAW Engine (Dalian) Co., Ltd. at Changchun, Jilin Province completed the first phase construction in August 2013 and started manufacturing the third-generation EA888 turbo-charged engine developed by Audi. The production capacity achieved in the first phase construction is 300,000 units/year, which will be raised to 450,000 units/year after the second phase construction is completed by mid-2014.
 The investment amount totaled CNY 2.5 billion. The site area is 94,000 square meters. The plant includes the machining facilities for cylinder blocks, cylinder heads, crankshafts and connecting rods as well as the engine assembly facilities.
▽Construction of Dalian new engine plant to commence within 2013. Third-generation EA888 gasoline engine and EA288 diesel engine to be manufactured.
 Volkswagen FAW Engine (Dalian) Co., Ltd. revealed that it will begin constructing a new plant in Dalian by the end of 2013. The new plant will begin manufacturing the third-generation EA888 Gen3 gasoline engine and the EA288 diesel engine in 2015. The output capacity at the existing Dalian plant is 300,000 engines/year as of October 2013.
▽Powertrain recycling plant in Dalian
 Volkswagen FAW Engine (Dalian) Company, 60% held by VW and 40% held by FAW Group, commenced powertrain recycle plant operations in August 2011 at Dalian Jinzhou New District and began recycling over 20 models of the EA888 series. Groundbreaking was in September 2010. The initial output capacity was 5,000 units/year, which is expected to be raised to 15,000 units/year in 2014 after increasing models to be recycled. Transmissions will also be recycled in the future.
 The recycling processes include pre-washing, disassembling, checking/measuring, machining, assembling and measuring/testing. By introducing precision equipments and VW Group's quality standards in the processes, old engines and transmissions are renewed to the quality of completely new products and launched again in the market.


Transmission production: Increasing capacity for MQ200 MT and DSG

FAW-VW Changchun powertrain plant started new MQ200 MT line with production capacity of 450,000 units/year
 FAW-VW's powertrain plant located at the same site of its headquarters in Changchun started operating a new plant for VW's fuel-efficient, transverse-mounted manual transmission MQ200 series in October 2012. Groundbreaking was in October 2010. It started manufacturing the series' eight models in total.
 This is the fifth VW MQ200 production line in the world. The capacity is 450,000 units/year and 1,500 units/day. FAW-VW has replaced the MQ200 supplied by Volkswagen transmission (Shanghai) Co., Ltd. by those made on its own.
 This new MT plant is located at the Changchun West New Economic & Technological Development Zone in Jilin Province, 5.5km from the FAW-VW Changchun headquarters. The total construction investment was CNY 1.96 billion. The site area is 103,000 square meters and the building area is 46,800 square meters. The modularized MQ300 MT, mainly paired with VW EA211 or EA111 engine, is used for FAW-VW's MT models with less than 1.6-liter displacement.
 FAW Group's FAW Car Co., Ltd. also uses the MQ200 MT in some of its own brand's models including the Besturn B50/B90. The MT plant, therefore, is expected to provide the MQ20 to FAW Car Co. Ltd.
▽To integrate MT production operations in Changchun: MQ250 MT to be integrated into the new MQ200 MT plant
 FAW-VW announced in May 2013 additional powertrain production plans in Changchun: it will build a new plant and increase the capacity to output the aluminum EA211 engine, a successor to the cast-iron EA111, and it will integrate transmission production operations. To accommodate the increasing lineup of new cars including MT cars with smaller displacement below1.6 liter, FAW-VW will further increase the production capacity of the MQ200 MT to be paired with 1.4-liter/1.6-liter engines.
 FAW-VW discontinued production of the O2K MT in Changchun around January 2013 and will transfer and integrate production of the MQ250 MT to be paired with turbo-charged engines over 1.8-liter displacement, into the new Changchun plant producing the MQ200 MT. The older Changchun plant manufacturing the O2K MT and MQ250 MT, both paired with the EA111 engines will be renovated as Audi's distribution warehouse. The Audi A3 to be produced at FAW-VW's new Foshan plant will mount the MQ250 MT made inside the Foshan plant.


Increasing DSG production capacity: New plant in Tianjin, expansion of Dalian plant
▽Building new DSG manufacturing subsidiary in Tianjin to be operational in 2014
 In August 2012, VW started construction of the new plant of Volkswagen Automatic Transmission (Tianjin) Co., Ltd., its 100% subsidiary to manufacture dual-clutch transmissions (direct shift gearbox: DSG) at Tianjin Economic & Technological Development Zone. Operations are scheduled to begin at the end of 2014. The DSG will be paired with over 2.4-liter turbo-charged engines. The DQ350, DQ500 and other VW's latest DSG will be produced and mounted on the VW/SKODA/Audi brands' cars of local production.
 The production capacity after the first phase will be 450,000 units/year with 1,500 employee Shanghai VW will assess the market demand in the medium- to long-term and decide whether to go ahead with the expansion project of the latest DSG production through the third phase. The initial investment will total approx. EUR 222 million (CNY 1.84 billion) to be increased up to EUR 900 million through the three phases.
 VW will also establish a machine tools/molding skills training center, VW Auto Machine Tool & Technology Training Center, Volkswagen Automotive Tooling and Mold Technology Training Center, as part of this Tianjin manufacturing subsidiary. The center will mainly train instructors to teach technical workers at VW's plants in China.
▽Existing Dalian DSG plant: second plant started operations in 2012, third phase in preparation as of July 2013
 VW's 100% DSG manufacturing subsidiary in Dalian, Volkswagen Automatic Transmission (Dalian) Co., Ltd., began preparations for the third phase construction as of July 2013. The government's approval had already been acquired in December 2010. It plans to complete the third phase by 2018 and increase the DSG output capacity to one million units/year.
 The first phase construction finished in October 2010 and production of the DQ200 7-speed DSG started with the output capacity of 300,000 units/year. The second phase plant started operations in 2012 with the capacity increased to 600,000 units/year.
 The initial investment totals EUR 170 million. The site area is 170,000 square meters. The number of employees as of the beginning of 2013 was over 1,400. The local content ratio of the DSG components by value was reported as 89% in 2012, while it was 35% in the beginning. Most of VW's D segment cars (over 1.8-liter displacement) produced in China mount the DQ200, DQ250 and other DSG.



(Reference) VW Group's passenger car production in China by JV and by model


Model 2011 2012 Jan.-Aug.
Grand total (VW Group in China) 2,196,223 2,624,841 1,732,585 2,056,324
   The breakdown
by OEM
or model
FAW-VW Jetta, All-new Jetta 207,770 250,506 162,322 161,480
Sagitar 126,617 195,090 110,905 190,006
Audi A6L 112,897 44,604 44,601 Discontinued
(fully redesigned)
Magotan 87,316 174,351 110,542 127,528
New Bora 200,692 224,615 151,660 157,622
Audi A4L 86,883 99,085 67,291 81,929
6th-generation Golf
(or "Golf A6")
99,691 127,209 82,580 65,111
CC or New CC 37,160 37,680 23,903 29,243
All-new Audi A6L
(or "Audi C7")
- 100,398 53,135 96,228
Audi Q5 58,776 89,346 58,091 67,206
Audi Q3 - - - 26,459
Total 1,017,802 1,342,884 865,030 1,002,812
Shanghai VW SantanaVista/1.8L 201,415 204,835 155,270 51,988
Polo 2/3box 168,139 143,424 86,682 92,961
Passat Lingyu 67,433 21,759 19,364 Discontinued (fully redesigned)
SKODA Octavia 128,305 136,750 98,876 93,298
Cross Polo - 19,309 12,182 12,778
Lavida 247,465 152,149 126,988 36,895
Fabia 45,896 48,702 35,151 32,185
Superb 44,744 45,029 39,392 31,362
New Passat 109,645 200,668 126,688 160,381
New Lavida - 98,246 14,761 227,454
All-new Santana - 5,872 - 102,131
SKODA Rapid - - - 21,282
Gran Lavida - - - 28,855
Touran 33,187 36,299 26,395 26,036
Tiguan 132,192 168,915 125,806 135,906
Total 1,178,421 1,281,957 867,555 1,053,512
The breakdown
by vehicle type
or OEM
2box/3box FAW-VW 959,026 1,253,538 806,939 909,147
Shanghai VW 1,013,042 1,076,743 715,354 891,570
Total 1,972,068 2,330,281 1,522,293 1,800,717
MPV Total(only Shanghai VW) 33,187 36,299 26,395 26,036
SUV Shanghai VW(2WD) 51,424 82,306 57,109 60,901
Shanghai VW(4WD) 80,768 86,609 68,697 75,005
FAW-VW(4WD) 58,776 89,346 58,091 93,665
Total 190,968 258,261 183,897 229,571

Note: FAW-VW fully remodeled the Jetta and released the all-new Jetta on March 9, 2013.

<Automotive Industry Portal MarkLines>