FAW-Volkswagen, the joint venture between the German company and China's second largest carmaker China First Automobile Works (FAW), has signed contracts worth a total of RMB 3.9 billion ($571m) with 22 automotive parts manufacturers to supply parts for its new plant in Chengdu, China. The total includes $120m in foreign investment.
The manufacturers involved include Faway-Johnson Controls, Magna Donnelly and Henkel Automotive Group.
The signing ceremony was held at a launch meeting for the FAW-VW Chengdu NCS Project Parts Park held last week with Chengdu Municipal People’s Government and FAW-VW Automobile. The 22 suppliers are the first to occupy the Chengdu Economic & Technological Development Zone (CETDZ) and will supply parts within a radius of 5km when phase one of the Chengdu Complete Car Manufacturing Project begins production. An official date for the start of production has yet to be announced. Over 100 additional suppliers are expected to follow them as production ramps up.
The CETDZ is speeding up the development of logistics services which last year derived an added value of RMB 5.7 billion to the region.
The joint venture began work on the development on May 8th this year with an investment of RMB 5.4 billion ($792m). Once complete it is expected to begin production again on the VW Jetta with an output of 150,000 vehicles and projections for a total of 350,000 per year in the long term. With the addition of Suchuan FAW-Toyota and Geely Chengdu Gaoyuan the development zone aims to produce 800,000 vehicles a year by 2015.
FAW-Volkswagen was making up to 24,000 Jetta models annually at the site up to May 12 last year when Sichuan was hit by a devastating earthquake that is estimated to have killed over 69,000 people.
The new investment was made in an effort to support reconstruction in the province and became the biggest single investment project with the highest technology content there following the earthquake.