SAIC Volkswagen is seeking self-breakthrough

As the third SUV model of SAIC Volkswagen, the Tharu, which was hit the market on October 31, 2018, is currently produced at the SAIC Volkswagen Ningbo plant. Recently, IIA has learned from the Department of Ecology and Environment of Jiangsu Province that SAIC Volkswagen Automotive Co., Ltd. Yizheng Branch plans to set a new Tharu model project in the existing plant area, with a total investment of 847 million yuan. The new project will adjust the production capacity of 105,000 cars to produce the Tharu without expanding construction area and increasing production capacity. After the “cold winter” of the car market in 2018, this move can be seen as a positive adjustment made by SAIC Volkswagen in 2019.

The Tharu will be put into production at Yizheng plant

On June 14, 2018, Yizheng Branch obtained the record of the new Tharu model project. According to the record content, Yizheng Branch intends to use the original production plant and auxiliary facilities to add and rebuild some process equipment in the original production area to produce Tharu models, but will not increase production capacity.

At present, the actual total production capacity of the Yizheng Plant has reached 448,800 units/year. After the completion of the project, there will be a total of five product lineups, including the Santana, the Gran Santana, the Rapid, the Rapid SB and the Tharu. Among them, 105,000 units will be allocate to produce the Tharu.

Is the capacity structure adjusted to seek a self-breakthrough?

SAIC Volkswagen sold 2,065,077 new cars in 2018, an increase of 0.1% compared with 2,063,077 units in 2017. The Chinese auto market shrank for the first time in 28 years in 2018. It is not easy for SAIC Volkswagen to maintain a 2-million-unit annual sales target while making a slight growth. However, after analyzing the sales volume of the company in the past three years, we found that SAIC Volkswagen's sales in the sedan are in a downward trend, while SUV products are the opposite.

At present, SAIC Volkswagen has six product lineups including the LaVida, the POLO, the Santana, the Passat, the Lamando and the Phideon. Three SUV product lineups are the Teramont, the Tiguan and the Tharu. Although the proportion of sedans still accounts for three-quarters of the total sales of SAIC Volkswagen, it is undeniable that the launching of the Tharu has provided a new growth point for the company.

In this January, the Tharu was sold 12,608 units, an increase of 23.9% over the previous month. Since its listing on October 31 last year, it has sold over 10,000 units for three consecutive months, with a cumulative sales volume of 37,481 units. The Tharu is to replace the old Tiguan, which has been sold in the market for many years. After the listing, it will inevitably be highly anticipated by the company. After the adjustment of the production structure of the Yizheng plant, the production capacity of the Tharu will be further released. In the face of uncertainties of the car market, this move may be a reflection of SAIC Volkswagen’s self-breakthrough.