SHANGHAI — Volkswagen AG achieves a 6.5% sales growth in China in 2000. Its sales of motor vehicles increased from 315,000 units in 1999 to 336,800 units in 2000, maintaining its 54% market share. The sales of luxury cars rose 300%.

The German automaker's larger joint venture Shanghai-Volkswagen Automotive Co. Ltd., a 50-50 partnership with Shanghai Automotive Industry Corp., saw sales exceed 220,000 units in 2000. FAW-Volkswagen Automotive Co., a venture with First Auto Works in northeast China's Jilin province, reported sales of 111,000 units in 2000, up 34% year on year.

Shanghai-VW reclaimed a 50% market share as sales of Santana models reached 18,000 units in the first month of the year, rising 10% over the same period last year.

The older Santana models, which China has been producing since the 1980s, comprised 7,000 units of the total, the largest ever for one month's sales in the vehicle's history. The rise in sales for the original, basic Santana model, widely consider to be outdated, comes despite last year's unveiling of the Santana 2000 and Passat sedan.

Company sources say the unexpected surge of Santana sales is the result of improvements made in the technological indices and sales network in the country. The company has shifted its sales target for the Santana to the businesses and taxi car market in the less-developed areas of China. Meanwhile, the time-honored market service system has provided strong support to Santana users, Shanghai-VW officials say.

The sales of modified Santana models — the Ziyoufeidian and Junjie — also registered 21% growth in January. Passat sales exceeded 4,600 units.

The company will grasp the opportunity brought by market liberalization after China's anticipated accession to the World Trade Organization in a move to further consolidate its strength in China, says Robert Buchelhofer, VW management board member in charge of sales and marketing. The automaker's strategy relies on new product introductions; the creation of a supply network that meets international standards for local manufacturers; and the further development and optimization of its market force.

FAW-Volkswagen plans to begin production of the Bora (Jetta) this year, and Shanghai Volkswagen plans to manufacture the Polo by year end as well. An upscale version of the car will come in 2003, in a bid to satisfy the rising demand for family cars in China.

VW also recently announced it is pursuing plans to build a vehicle that would retail for less than its US$9,600 Lupo, but would compare in size. The vehicle likely may be a stripped down car based on the old Santana platform.

Production of the new vehicle would occur at Shanghai-VW facilities.

Buchelhofer notes that China's market is becoming a demand-oriented market. If the Chinese need more compact cars, “we are ready to satisfy them. But, it is still too early to start now,” he says.

In the next five years, Volkswagen will increase its sales in the Asia/Pacific region from the present 430,000 units to 650,000 and sales in China from 336,000 to 450,000, he says. Sales in Southeast Asia and the Pacific region are expected to rise 300% to reach 90,000 units.

In the coming five year, Volkswagen plans to invest E1.8 billion (US$1.6 billion) in the Asia/Pacific region, including E1.6 billion (US$1.4 billion) to be channeled into China.

Its strategy for success also relies upon its pursuit of environmentally oriented technologies.

Shanghai-VW recently reached an environmental milestone by meeting all Euro-II emission requirements to become the first “green” factory that has achieved ISO14000 certification. Its base-model Santana and Santana 2000 cars were the first to get the permission to enter the Beijing market after they reach the Euro-I emission requirements. After that, the company started work to satisfy Euro-II standards.

Its new Passat is equipped with a high-efficiency engine suitable for installing catalytic purifying devices. Its exhaust emission is far lower than what Euro-II required, officials say. At the same time, Shanghai-Volkswagen has expanded its environmental protection to cover noise control and reduction of electromagnetic interference.