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Volkswagen putting brakes on partnership with SAIC

Posted on 18 January, 2017

A Volkswagen spokesman has said it would not produce or sell any Audi cars with Chinese manufacturer SAIC Motor Corp until at least 2018 and plans first to strengthen ties with existing partner China FAW Motor Corp, who has been building Audi cars since 1996. A statement released by Volkswagen on Wednesday outlined a 10-year plan with FAW with a strong focus of expanding in China. The plan included agreements to produce five additional electric models locally and introduce them to the Chinese market, including purely battery-powered cars with range of 500 kilometres and plug-in hybrids, with sales to begin in 2017. News of the Chinese expansion is expected to disappoint some. A group of dealers wrote a letter to Audi last year, claiming a new sales network would further damage an already tenuous situation, and existing dealers suffer from slowing sales and generally operate at a loss. In November, Volkswagen announced a non-binding agreement with SAIC to discuss a partnership regarding Audi AG, the highest-selling premium car model in China, as part of a broader vision to develop Chinese sales. The partnership could boost slowing sales for Audi as other premium brands, particularly Mercedes-Benz and Cadillac, are encroaching on its market share. Volkswagen currently receives a 50-50 share with SAIC, higher than its 40 per cent stake with FAW. State-owned China Daily quoted VW China chief executive Jochem Heizmann as saying, “No sales, no production, nothing this year.” This claim was later confirmed by a VW spokesman, who told Reuters that talks with SAIC were ongoing but nothing “operational” was scheduled before 2018. "As soon as there is an agreement, there will be measures to fulfil this agreement, but right now we are just in talks, and we have no agreement."