VW Unveils China 'Olympic Plan'

Germany's Volkswagen AG plans to introduce up to 12 new models in China by 2009 while cutting costs and improving service in hopes of regaining its eroding market share in the country.

The company's new "Olympic plan," so named because it emphasizes teamwork and finishes in 2008, the year of the Beijing Summer Games, will increase product differentiation even as it boosts cooperation to reduce costs between its two Chinese joint venture partners, the company said Monday in a news release.

The partners will centralize parts purchasing and power train development, it said. That should help lower local material costs.

"Our goal is to win the gold medal as the most successful carmaker in China," the company statement said.

Volkswagen entered China 21 years ago, before its biggest competitors, and long dominated the market with its Santana and Audi models.

However, recent years have seen a slew of new competitors begin production in China and the German company has appeared slow to respond with more choices and better prices, quality and service. VW's China operations also suffer from competition between its joint ventures for sales of the same models.

Facing intense competition both from global rivals like General Motors Corp. and domestic upstarts like Chery Automobile Co., VW has seen its market share drop to 18 percent, from well over 50 percent in the 1990s.

Volkswagen and its partner Shanghai Automotive Industry Corp. have already announced plans to begin producing hybrid gasoline-electric vehicles in mid-2008. Its other joint venture is with FAW Group Corp., based in the northeastern city of Shenyang.

In August it announced price cuts of up to 13.7 percent as part of a sales drive.

The Wolfsburg, Germany-based automaker said it plans to add the Skoda brand to its Shanghai joint venture in 2007 and introduce its first new model in November, specifically catering to Chinese tastes.

"Today we are in a transition phase where we are laying foundations preparing ourselves for a more sustainable development of our company in China," said Winfried Vahland, president of Volkswagen Group China, in the release.

"Speed is today the most decisive success factor," Vahland said.