Apr 15, 2019 (China Knowledge) - Volkswagen is currently considering increasing its stakes in its local Chinese joint ventures to increase its presence in the world’s largest auto market.
The company’s plans come as Chinese authorities ease restrictions for foreign manufacturers amid a slowing economy which has led to the country’s auto market contracting by 2.8% last year.
Volkswagen currently has ties with China’s SAIC Motor and FAW, two of the country’s largest manufacturers and is exploring options to acquire a stake in its third partner Anhui Jianghuai Automobile Group.
China currently accounts for 40% of Volkswagen’s global deliveries and is a key market for the German automaker. The company’s two joint ventures in China with SAIC and FAW managed to bring in double-digit pre-tax profit margins in 2018 despite a weak Chinese auto market last year, coming in contrast with the company’s European operations which has seen its profit margins narrow due to tighter regulatory controls on emission limits.
The Chinese auto market is currently in a transformation phase as the county shifts towards electric vehicles and Volkswagen hopes to be at the forefront to capture this new growth by forming strong alliances with domestic manufacturers.
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