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Volkswagen-SAIC aim to make Audi sedans in Shanghai plants

German automaker Volkswagen and its Chinese joint venture partner SAIC Motor plan to spend 4.13 billion yuan ($590 million) to revamp their car factories in Shanghai for making new Audi sedans, according to a government document.

SAIC shares increased by their maximum daily limit of 10% following the news on Tuesday, becoming their biggest increase since March 31.

SAIC Volkswagen, the joint venture (JV) of German automaker and China’s biggest automaker, right now only sells cars under the Volkswagen and Skoda marques. Audi is one of Volkswagen’s luxury car unit.

With the revamp at its Shanghai plants, the JV is looking for an annual manufacturing capacity of 60,000 Audi A7L sedans and 60,000 new Volkswagen sport-utility vehicles. The total capacity at the plants would not be changed.

The revamp, expected to be completed by the end of this year, comes as demand for luxury cars in China remained pretty strong even as sales in the country declined over the past two years.

SAIC Chairman Chen Hong has said before that the JV plans to roll out the first Audi product in early 2022.

For the Audi manufacturing process, the JV will also utilize the printing facilities at its recently built MEB platform, a Volkswagen platform that allows effective production of various electric vehicle models.

Volkswagen hopes to begin production based on its MEB platform in Shanghai from the fourth quarter and has sought government authorization for the production of its electric ID.4 vehicles.

Audi China stated its project with SAIC was proceeding as per the plan, without providing any more details.

SAIC Volkswagen’s sales dropped 37% from a year ago to 577,385 vehicles in the first half of 2020 due to the coronavirus crisis in China, while total industry sales fell 17%. The JV sold 2 million cars in 2019.

Other than SAIC, Audi also has a long-term collaboration with Chinese automaker FAW Group for building all its cars in the northeastern city of Changchun and the southern city of Foshan.

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