VW to increase its share in the Chinese Faw to 50%
VW to increase its share in the Chinese Faw
Friday, June 5, 2015 – 15:00
The Beijing government, which controls the Chinese Group, has given a green light to Volkswagen to increase its stake in First Auto Works. The German company currently manages 40% and aims to rise up to 50% thanks to an investment of about 5 billion Euro.
VW and FAW had set up internal working groups to evaluate the move. The VW Group is very strong in China (thanks also to another joint venture with SAIC) and in 2014 has sold 3.7 million units.
China approves VW’s stake increase in joint venture with FAW
The Volkswagen group sold a total of 3.7 million autos in China last year, up 12.4 percent from the previous year, through its joint ventures Shanghai Volkswagen and FAW-Volkswagen. The German company has 29 vehicle and component manufacturing facilities in the country and wants to increase its stake in the joint venture from 40 percent – most likely to the maximum limit allowed by the Chinese state (50 percent). Analysts at Evercore ISI believe the crucial joint venture has a total value of around 50 billion euros ($57 billion), meaning the stake jump would most likely cost VW around five billion euros.