Volkswagen Plans to Expand in China with New Factories

Image via Flickr by David Villarreal Fernández

Over the next five years, Volkswagen plans to invest $106.3 billion on new fuel-efficient vehicles. This includes a plan for new factories and expansion in China. The automaker wants to be a world leader in economical and ecological vehicles. Volkswagen’s investment is projected between 6 and 7 percent of their revenue between 2015 and 2019. This plan comes at a time when many automakers are slowing down research on fuel efficiency.

Most of Volkswagen’s investment money will go towards development and production of new hybrid and electric vehicles, including a sports utility model. Development will be based around meeting carbon dioxide emission targets as well as lowering or eliminating fossil fuel reliance. New Volkswagen production facilities are being opened up in Mexico, Poland, and China. However, the largest chunk of money will go to expansion in China where Volkswagen already has a hold.

Many automakers turn to China for their manufacturing abilities. Brands such as BMW and General Motors are already taking advantage of the cheaper labor costs and experienced workers. There has been some push back lately in China’s automaker industry because they are producing more inventory than demand and incurring storage costs, but this should be resolved with time and not play a major impact on Volkswagen’s expansion plans.

Volkswagen is investing more on fuel efficient technologies than most automakers right now who are enjoying the low cost of fuel in the U.S. and around the world. This drop in the price of oil is even expected to last for a few years more. However, when gas prices go back up, Volkswagen will be placed well to compete in the fuel-efficient vehicle market. Plus, there will always be a place for sustainable automakers in the auto industry. Watch out for what Volkswagen releases in the next couple of years.

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