VW considers setting up commercial vehicles venture in China

FILE PHOTO: The logo of Anhui Jianghuai Automobile Co (JAC Motors) is pictured at its booth during the Auto China 2016 auto show in Beijing, China April 26, 2016. REUTERS/Kim Kyung-Hoon

BERLIN/FRANKFURT (Reuters) - Volkswagen VOWG_p.DE may expand cooperation with China's Anhui Jianghuai Automobile (JAC) beyond electric cars to jointly develop and build commercial vehicles in the world's largest autos market.

The German group and JAC announced in June they were to set up a joint venture to develop and build zero-emission passenger cars as Volkswagen (VW) is pushing efforts to achieve the Beijing government’s production and sales quotas for new-energy vehicles.

On Monday VW said it was looking along with its commercial vehicles division at deepening the cooperation with JAC to include the design, technology, product quality and development of multi-function vehicles.

The venture would affect combustion engined and alternative-energy powered vehicles, would be owned equally by JAC and VW and would be based in JAC’s home town of Hefei, VW said.

“VW Commercial Vehicles has a growing number of loyal customers in China,” executive Joern Hasenfuss said. “But there are significantly more opportunities,” he said without elaborating.

Under the tie-up, VW and JAC could jointly tap growing demand for light pick-up trucks in China while the German group would also save customs duties by building its multi-van and Caddy vehicles at JAC facilities, analysts said.

It’s also the latest evidence of VW’s foreign expansion not being confined to its passenger car operations.

In September VW’s commercial vehicles arm started building the Amarok pick-up truck in Ecuador with local partner FISUM after starting production of the box-type Caddy model at a new multi-brand facility in Algeria two months earlier.

Reporting by Andreas Cremer and Maria SheahanEditing by Douglas Busvine, Greg Mahlich