Volkswagen’s bid to raise JV stake thwarted
November 17, 2014 Category Automotive, Weekly
Volkswagen’s bid to increase its stake in a lucrative joint venture with Chinese partner FAW has stalled. It had wanted to raise its 40% holding in FAWVolkswagen Automotive to about 50% after more than a year of talks. VW holds a 50% stake in its second Chinese joint venture with SAIC Motor Corp. Raising its stake in the project with FAW would earn it a greater share of both ventures’ growing profits which have more than doubled since 2010 to €4.3 billion in 2013. Demands from local partners, policy-makers and regulators are getting more rigorous. In return for winning a 25-year extension of the tie-up with FAW last month – from 2016 to 2041 – VW agreed to develop more cars in China and to use the latest technologies to foster China’s push for electric and hybrid vehicles. VW conducts most of its R&D work at its German headquarters and is reluctant to share valuable results with other parties, given the risk of counterfeiting. VW only won Chinese approval to expand its production footprint in prosperous eastern cities last year by opening a plant in Xinjiang in China’s north-west, the Shanghai Daily reports. VW sells nearly 40% of its vehicles in China.
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