Volkswagen (VW) has clarified that its plant utilisation rates in China will come down going forward as more production capacity comes on stream. A report cited the automaker's clarification in response to a media report that the German OEM was planning production cuts of 10-20%. Without citing its sources, news website Wirtschaftswoche reported that VW was planning outright production cuts in China. "The statement that VW would confirm sinking utilization of its Chinese auto and component plants is not correct," VW told Reuters in an emailed response. "By building up additional production capacity such as our new car plant in Changsha and [a planned site] in Qingdao in 2017, VW will normalize the high existing workload at its factories to near 270 working days per year (from 300 days currently)," said the automaker.
Significance: VW's clarification is in line with its public stance of maintaining current production levels . However, it also clarifies that average production volumes and utilisation rates at existing plants will come down over the next two to three years. Similar to several foreign automakers, VW's performance has been under pressure in China, where OEMs with relatively inexpensive sport utility vehicles (SUVs) are registering better sales. In a clear sign that the automaker sees the current weakness in the Chinese market as a short-term trend, VW is going ahead with its plan to establish a new manufacturing plant in Changsha, Hunan province.
