Volkswagen Riding SUV Wave in China

BEIJING – Volkswagen announces plans to offer 12 new or revised SUV models in China by the end of 2020 as demand for the vehicles rises rapidly in the automaker’s single largest market.

The ambitious new model push, detailed by Chairman Herbert Diess at the launch of the third-generation Touareg, forms part of VW’s new, globally aligned model strategy that will see at least one of the new SUVs to be sold in China offered in North America as a smaller sibling to the recently introduced Atlas.

Previewed alongside the new Touareg at a media presentation held here were three new Chinese SUVs, including the domestically produced T-Roc and two lightly veiled concepts of upcoming production models: the so-called Advanced Mid-Size SUV to be produced by joint-venture partner FAW and the Powerful Family SUV to be built by longtime VW associate SAIC.

The T-Roc is derived from the model introduced earlier this year to European markets. Like the Advanced Mid-Size SUV and Powerful Family SUV, it is based on VW’s versatile MQB platform.

Of particular importance to the U.S. market is the Powerful Family SUV. As well as being planned for production in China, the vehicle is to be built at VW plants in Argentina, Mexico and Russia.

In a move that will provide Volkswagen North America with a new key SUV model, the automaker plans to source the production version of the Powerful Family SUV from its Puebla plant in Mexico for the U.S.

“We will supply the U.S. from Mexico,” Diess tells WardsAuto without revealing any specific timeframe for the new SUV’s introduction to the North American market.

Although the Powerful Family SUV is larger than the existing second-generation Tiguan, indications are it will be offered at a lower price and will slot in the Volkswagen lineup below the Atlas, which is priced from $30,750.

Capacity for the Powerful Family SUV at VW’s Puebla plant will be created when Beetle production ceases in 2019.

The name worn by the concept in China will make way for a more suitable name in the U.S. market, according to insiders familiar with VW’s global SUV plans.

Together with FAW and SAIC, VW sold 3.2 million passenger cars and commercial vehicles in China last year, capturing 13% of the total Chinese market. The record sales included some 400,000 SUVs, according to Diess, who says Chinese car buyers’ tastes and market trends will play an increasingly important role in the German automaker’s future new-model development.

“The share of SUV sales in China has grown from 8% in 2007 to more than 45% in 2017. We can’t ignore these figures,” the executive says.

Volkswagen presently sells three SUV models in China: the Tiguan (in standard and long-wheelbase versions), the Touareg and a Chinese version of the Atlas called the Teramont.

But with the Chinese market demanding more and more SUVs, Diess says VW will move quickly to significantly expand its presence and sales reach there.

“China will have a decisive effect on the success of our future strategy,” he says. “We will orient our product range even more closely to the wishes and expectations of Chinese customers.”

The SUV offensive forms part of a larger overhaul of VW’s Chinese lineup with 38 new or revised models confirmed by Diess by the end of 2020, including the FAW-produced T-Roc and production versions of the Powerful Family SUV that will roll off production lines at both FAW and SAIC in slightly differing forms.

VW says it will introduce nine new models to the Chinese market in 2018, including a plug-in hybrid version of the long-wheelbase Tiguan and a battery-electric version of the Bora.