SHANGHAI -- To keep its leading position in China, Volkswagen AG is considering adding a domestic brand to penetrate China's fast-growing entry-level segment.
"We are currently evaluating with our partner First Auto Works whether we need to add a domestic brand to enter the low-cost portion of the Chinese market," Soh Weiming, executive vice president of sales and marketing for VW Group China, said at the Automotive News China Conference.
VW's deliberations come as a number of international automakers are adding joint-venture brands. In recent months, General Motors, Honda Motor Co. and Nissan Motor Co. have created such brands. The central government wants international automakers to create those brands so their Chinese partners can gain expertise and technology.
"Currently we are not competing in the 20 percent of the market made by low-cost products, but before making a decision we should also look to how this segment could evolve," Soh said.
Whether or not it adds a new brand, VW plans to double production capacity by 2018, to about 4 million units a year. It is building two assembly plants in China and will expand production at its seven existing plants.
The new plants will start with annual capacity of 300,000 each, but are designed to easily expand to 600,000. Soh said the new plants will take two to three years to begin production.
Last year, VW's six brands in China sold 1.9 million units, up 37 percent from 2009. This year, Soh predicts VW's China sales will total 2 million units.