CRI NEWS

Volkswagen to Cut Costs by $500 Mln in China

2004-8-24 11:51:59 CRIENGLISH.com

Volkswagen has told its joint ventures in China to cut their costs by 500 million US dollars by the end of 2005.

Volkswagen has told its joint ventures in China to cut their costs by 500 million US dollars by the end of 2005 in order to deal with a predicted dip in profits.

Last week, the Chief Financial Officer of Volkswagen, Hans-Dieter Poetsch, said that the company would not be able to reach last year's profit level in China.

The expected drop is due to an increasingly tough domestic sales environment.

It is also related to the currency factor. As some auto parts of Volkswagen are purchased in the international market, because of mounting exchange rates between the Chinese RMB and the euro, the production costs have been rising.

Industry figures showed that Volkswagen's sales in China dropped slightly in the first half of this year. The company sold about 310,000 cars, down 4.2 percent from last year.

Meanwhile, China's whole auto market also appears to be slowing down. China's sedan car sales dropped over three consecutive months in the second quarter of this year.

(Photo Source:www.qianlong.com)

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