U.S. or Bust: Volkswagen China developing car for North America
Volkswagen makes good-looking vehicles with terrific interiors, very good fuel economy, and spirited driving dynamics. In the US, those virtues alone don't make a high volume automaker, as price tends to play a major role in buyer's decisions. Due to the strength of the Euro, VW has much higher fixed costs than its competitors, even when production in Mexico is taken into account. As a result of their large financial burden, Volkswagens usually cost more than most of the competition. To strengthen their competitive position and leverage cheap labor in developing countries, VW is planning on producing vehicles in China for the US market.
VW, along with partner SECI Motors, is a juggernaut in the land of the Great Wall, as the Germans automaker has been entrenched in China since 1984. The SECI/VW partnership will replace the Chinese market Passat Lingyu with a sedan that will also be sold on our shores. Many automakers have utilized China's inexpensive labor for cheaper parts, but as of yet, no US-sold vehicles have been assembled there. If VW can make cars in China that can meet US safety and emissions standards, Europe's only volume automaker with a presence in the US will go a long way towards closing the cost gap.
[Source: Auto News (subscription req'd)]
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Reader Comments (Page 1 of 3)
why not the LS2/LS7? 11:36AM (7/19/2007)
Passat Lingyu?
I would have expected the Santana. They have a zillion of them, it has to be one of the most popular cars.
Most of them are the older version, the one which is 1982-ish VW Quantum.
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rwcmick 11:38AM (7/19/2007)
While VW interiors have for the most part held a very high standard, I think that their current generation of vehciles has taken a step back in style.
The Mark IV Jetta was a knockout! Sales picked up and the blue sky value of VW dealerships skyrocketed. The the Mark V model arrived, and it wasn't nearly as appealing from a stylistic point of view. Combine that with an ill advised move upward in pricing and well I think that sort of sums things up.
Bring back really sexy looking Jetta's and Passat's and all will be forgiven!
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geo.stewart 12:16PM (7/19/2007)
I love the looks of my 2005 GLI (last of the mark IV).
Quality on the other hand,... nothing major but lots of niggles. and high service costs. service costs are probably the big killer that will drive me to a mazda3, s40, or civic si.
Don 8:27PM (7/19/2007)
Now how are Chinese built vehicles going to be better than the current crop?
Kowell 11:46AM (7/19/2007)
First Mexico now China... it just keeps getting better and better....
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JayP 12:13PM (7/19/2007)
I was thinking the same- the VW quality out of Mexico was so shoddy that it delayed a model intro in the US.
If VW was going to dump the US, it would have been in the early 90's after that mess.
zamafir 12:32PM (7/19/2007)
Yay, let's all ignorantly pretend that Honda doesn't import Chinese built civics to the US, that they weren't the first automaker to do so, and insinuate that Chinese labor is inferior, just like, um, everything else they build, Audis, BMWs, et-al, if it's Chinese it must be crap! Woot for Jingoistic views!
Considering the increasing devaluing of the dolar in relation to the Euro, this isn’t a shocking move at all.
leather bear 3:06PM (7/19/2007)
Honda has never imported a Chinese-made Civic (or any other model) to the USA. Of the 2007 Civics, the 2-door coupes are all made in Alliston, Ontario. The 4-door sedans come from Alliston, East Liberty (Ohio), or Suzuka (Japan). This info comes directly from Honda’s OE parts microfiche (and the engine and chassis serial # charts therein). Honda was considering importing some Chinese-made Fits, but all of those currently imported to the USA are produced in Suzuka.
zamafir 5:23PM (7/19/2007)
Thanks Leatherbear, i rechecked the story, it's civics to europe, which has been going on for two years, and as you've mentioned they're considering bringing the fit over as the chinese civics have been doing a-ok in europe thus far.
Nick 11:46AM (7/19/2007)
I think it's wise of volkswagen to take advantage of the cheaper labor in order to achieve more competitive pricing.
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djSyndrome 12:28PM (7/19/2007)
I think it's wise for Americans to buy cars that are assembled here in America. VW was the first 'import' manufacturer to have a plant in the United States, and they would gain a lot of favor here if they would start building vehicles on our shores again. As it stands now, the VW/Audi group is the only volume seller doing business in the United States without a plant located here.
1337 3:12PM (7/19/2007)
Americans would gain a lot of favor if they didn't demand $150,000 per year to work in an automotive factory.
I_Hate_China 12:40PM (7/19/2007)
Volkswagen is shutting down its German factory that built the US market Passat and is sourcing Passat from its Chinese factory instead. Unfavorable Dollar/Euro exchange rate was the primary deciding factor.
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nagmashot 1:46PM (7/19/2007)
VW close plants in Germany? How can I miss that news as a German... *rolleyes*
The Passat is build in the VW plant in Emden north Germany, currently they build there the sixed generation... the other Passat factory is Mosel near Zwickau a completly new build factory. In no other plant in europe, VW produce Passat models.
Both are not closed and running very well...
2006 was a extrem good year for VW... they had build 5.72 million cars, earned 104billion Euro ($140,040,000,000) and made a win of $3.7billion after tax.
Jackalope 11:59AM (7/19/2007)
Is this in the end really feasible? Specifically, the part about producing a safe and high quality finish car for the very discerning US market. For VW to do so from China, it may require them to share advance technology from VW Europe and they may find that the risk of that technology being copied by their Chinese partners to be too great. Which means, if VW China were to develop the tech from scratch, it may take a while before they can get up to US standard. If it's just assembling parts from Europe, then I suppose it's possible.
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I_Hate_China 12:50PM (7/19/2007)
The Passat in question is the current generationn Passat Mark VI, not the next generation Passat. Volkswagen is simply trying to source Passat from China after closing down its money losing German factory.
And foreign companies do a good job of keeping the technology out of Chinese hand, like doing the chassis fabrication and final assembly at the Chinese joint venture, but building the engine and transmission at their wholy owned subsidiary. This is the reason for Chinese frustration, as their joint venture partners haven't learned a thing about automotive engineering after building cars for foreign brands for 20 years.
gordon 12:11PM (7/19/2007)
I want a jetta the same reason I browse at Banana Republic and shop at the gap. The jetta is like a cheap audi and the gap sells stuff that looks like it should be in Banana. I would kill to have a vw that was fun to drive and kinda weird.
http://www.cheapgreencar.com
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zamafir 5:25PM (7/19/2007)
I take it you've never driven a MKV GTI then?
bob 12:15PM (7/19/2007)
go china!!!!!!!!! you gonna control the world economy
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Ligor 12:32PM (7/19/2007)
they already sort of do.
But, as far as VW is concerned, I would have thought they would be bringing a plant or two here in the US. I mean why can't they do it, Nissan/Honda/Toyota/Hyundai are all briging plants here
if they bring chinese cars here, most likely it will hurt their sales even further.