(Adds quotes, investment in gearbox venture)
SHANGHAI, Jan 28 (Reuters) - Volkswagen AG plans to produce 330,000 vehicles at one of its two main auto ventures in China this year, up 18 percent from 2002, a top official at the German company's Chinese partner said on Tuesday.
Shanghai Volkswagen Automotive Co Ltd, a 50-50 venture between Volkswagen and China's number two carmaker Shanghai Automotive Industry Corp (SAIC), had just begun producing its new Gol compact sedan, SAIC chairman Chen Xianglin told Reuters.
Volkswagen is gearing up to expand output capacity in the world's fastest-growing auto market, racing to keep pace with the ballooning demand that analysts foresee over the next few years.
"We plan to push more products onto the market this year," Chen said on the sidelines of a ceremony marking the launch of a $96 million gearbox joint venture with Volkswagen in Shanghai.
"The price of the Gol would be around 80,000 yuan," around $9,600, but the final price had yet to be finalised, he said.
The Gol would be one of the cheapest foreign-made cars in China, a haven for automakers coping with depressed global sales.
It would cost less than rivals produced by Ford Motor Co and General Motors , who are showing signs of starting their own price war in the cut-throat Chinese market.
Chen did not mention output targets for the four-door, 1.6 litre engine compact car, but Volkswagen's Asia-Pacific chief Robert Buchelhofer said last month it could come to around 50,000 vehicles a year.
"We're going to be number one" in car output, Chen said.
Shanghai Volkswagen was also in talks with customers in the Philippines, Taiwan and Japan, aiming to export to those countries, Chen said without giving details or a timeframe.
FROM CARS TO GEARBOXES
Volkswagen's ventures have about 40 percent of the passenger car market in China, the European automaker's biggest market outside Germany. Volkswagen delivered about 511,000 vehicles to Chinese customers in 2002, up 42 percent from 2001.
Booming economic growth and rising disposable incomes in China helped propel car sales 56 percent to 1.126 million in 2002 -- the first time annual car sales exceeded one million.
And the German automaker, which set up its first Chinese venture with SAIC in 1985, is venturing into other areas.
Volkswagen kickstarted a gearbox venture on Tuesday in Jiading, a fledgling industrial district about an hour's drive from central Shanghai.
Volkswagen owns 60 percent of the plant, which has a total investment of $96 million and registered capital of $32 million.
SAIC and China's leading automaker, First Automotive Works, each hold 20 percent. The venture's gearboxes will go into Volkswagen's Bora and Polo models produced in China.
"The gearbox joint venture will help to deepen cooperation with our Chinese partners," Volkswagen board member Folker Weissgerber said in a statement.
Some 50,000 Boras, made by Volkswagen's joint venture with FAW in the northeastern city of Changchun, had been sold in China by mid-December, 2002.
Car sales in China are expected to balloon, rising 47 percent over the next two years, buoyed by falling import tariffs and rising incomes, ING Financial Markets said in a report last week.
About 3.2 million vehicles were sold in China last year, a number that could jump to 4.7 million by 2004, ING said. ($1=8.276 Yuan)