A Volkswagen production line in Shanghai. The group's successful partnerships with SAIC Motor Corp and FAW Corp have helped it top the market in combined sales for two decades. [Photo / China Daily]

10.6 billion euros for capacity, new models largest-ever in the nation

BEIJING - German carmaker Volkswagen Group plans the biggest-ever investment in China by a carmaker over the next five years as it spends 10.6 billion euros ($13.9 billion) to consolidate and further expand its leading position.

Last week the auto giant reported 2010 was another year of robust sales growth as it moved a record 1.92 million vehicles on the Chinese mainland and in Hong Kong, a surge of 37 percent from the previous year.

The strong performance helped Volkswagen Group, which runs two major joint ventures with local partners, keep its two-decade crown as the top carmaker in the nation.

"Growth in the Chinese auto market exceeded everyone's expectations last year," said Karl-Thomas Neumann, president and CEO of Volkswagen Group China. "Although the growth might cool in 2011, we still expect good performance in the coming years."

The record investment from 2011 to 2015 will fund "expansion of production facilities and development of new products", Neumann said.

Market of 18 million units

Overall vehicle sales in China grew by 32.4 percent from 2009 to 18.06 million units last year, according to data from the China Association of Automobile Manufacturers.

The association predicted last week that vehicle sales would increase by 10 to 15 percent this year.

Volkswagen brand overall sales reached 1.51 million units in China last year, up 35 percent.

The group's luxury marque Audi delivered a record 227,938 cars in the nation last year, a skyrocketing increase of 43 percent.

Sales of the group's Czech unit Skoda jumped by 47 percent to 180,515 units in 2010.

The group's joint venture with SAIC Motor Corp builds Volkswagen-brand and Skoda cars. Its other tie-up with FAW Corp makes Volkswagens and Audis.

Special Coverage: A review of China's auto industry Related readings:  Daimler, VW to sign China deals worth $5b  Shanghai VW passes 1 million landmark  'BlueMotion' powers VW to save energy, boost sales  VW sponsors sports, retains sales race crown

Neumann said the outstanding results were due to the group's wide range of competitive models and its strategy of innovative and affordable cars offering fuel-efficient technologies - the carmaker's TSI engines and DSG transmissions.

Sales of the Volkswagen Lavida compact sedan, produced at its partnership with SAIC, surpassed 240,000 units last year, making it one of the best-selling models in China.

Volkswagen Group said it would launch two new mid-sized models from its two joint ventures next year.

The tie-up with SAIC also agreed with Skoda earlier this year to produce the Czech brand's compact SUV Yeti in 2013.

"Based on our solid performance and strong partnership with SAIC and FAW, we are well prepared for long-term sustainable growth," Neumann said.

"We have kept our promise to bring the latest technologies to China. The first batch of e-cars (electric cars) with the VW logo will hit China's roads in 2011."

The group announced earlier this year that it would launch Volkswagen Lavida and Golf electric cars from the joint ventures with SAIC and FAW between 2013 and 2014.