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Over RMB 370 Billion Yuan of Taxes Paid by FAW-VW over the Past 25 Years

Date:09-20 12:06 Source:autochina.comnews.cn Authour:Meng Huazhen

Pursuit of high quality is what keeps FAW-VW moving forward. Ever since its startup, the partners have been committed to building it into the best automobile joint venture in China. When developing its strategic plan for 2020, FAW-VW also launched its own local brand, with the core values of innovation and high quality. In fact, quality, responsibility, innovation and progressiveness are the four internal driving forces that keep FAW-VW moving forward.

Following the “2020 Strategy”, FAW-VW is now developing its “2025 Strategy”.

Over RMB 370 Billion Yuan of Taxes Paid by FAW-VW over the Past 25 Years

Over RMB 370 Billion Yuan of Taxes Paid by FAW-VW over the Past 25 Years

On September 8th, 2016, FAW-Volkswagen Automobile Co. Ltd. (FAW-VW) celebrated its 25th anniversary in Changchun. Mr. Xu Ping, Chairman and Secretary of the Party Committee of China First Automobile Works Group, Prof. Dr. Jochem Heizmann, President and CEO of Volkswagen Group China, government leaders from cities where five major production bases of FAW-VW are located, previous members of FAW-VW leadership, and all incumbent members of the economic management committee attended this event. Afterwards, Mr. Zhang Pijie, Director and GM of FAW-VW and Dong Xiuhui, GM of FAW-VW Sales Company, held an interview with major auto media, including China Auto. Among other topics they talked about why innovation is the driving force of FAW-VW, how to respond to market changes, the next period to come, and future opportunities.

FAW-VW has effectively promoted the development of the Chinese auto industry

Zhang Pijie: FAW-VW has been a main driving force during China’s era of the auto. Over the course of 25 years, FAW-VW has produced and sold 12.5 million vehicles and paid more than RMB 370 billion Yuan in taxes. To date it has released 12 series of models under two major brands – Volkswagen and Audi. FAW-VW has helped set in motion improvements in the manufacturing of parts and equipment in the Chinese auto industry, enhanced the whole industry’s quality awareness, and fostered a wealth of talent in the industry. All in all, this joint venture has indeed made its due contribution to the Chinese auto industry.

FAW-VW was the first modern car industrial base established in China with an economy of scale. It started with production capacity of 150,000 vehicles. FAW-VW opened up the Chinese family car era - many Chinese families bought the Jetta as their first car. It was the first automaker whose production covered a full range of passenger car models, and it is also the highest earner and biggest tax payer among domestic auto makers. Most of its products are top sellers in the auto market. FAW-VW has been the top employer in the Chinese auto industry for the last 7 years. It is also the car maker with the most extensive dealer network, whether for Volkswagen or Audi. Its network saw the first 4S store that complied to national standards in China. In December 2014, the 10 millionth vehicle rolled off the line in Changchun, meaning that FAW-VW had achieved this goal quicker than any other joint venture in China. In addition, it has also achieved a number of industry firsts. For example, it was the first company to use the five-valve engine, the first to adopt the automatic gearbox, and the first to provide ABS in cars.

FAW-VW’pursuit of high quality is what keeps it going forward

Zhang Pijie: Pursuit of high quality is what keeps FAW-VW moving forward. Ever since its startup, the partners have been committed to building it into the best automobile joint venture in China, and high quality is one of the commitments they made.

In terms of process design, FAW-VW has introduced Volkswagen’s global quality standards in its production; in terms of human resources, it has applied itself to building a highly professional and competent team; and in terms of customers, it has always sought to deliver high customer satisfaction. Take FAW-VW’s luxury brand Audi for example. This brand has achieved the highest customer satisfaction rating for 8 consecutive years. In FAW-VW’s culture, the pursuit of high quality is what drives this auto maker forward. This driving force is reflected in many details, such as the interiors and exteriors of its products.

When developing its strategic plan for 2020, FAW-VW also launched its own local brand, with the core values of innovation and high quality. In fact, quality, responsibility, innovation and progressiveness are the four internal driving forces that keep FAW-VW moving forward.

The fourth stage will be about innovation

Zhang Pijie: FAW-VW is ready to enter a fourth stage, which is the innovation stage. Breakthroughs in internet and other technologies can completely satisfy users’ rapidly changing demands, but at the same time make users now expect even more. This is a process of mutual promotion.

At the next stage, with the support of both partners we will strengthen FAW-VW’s innovation capability. Alongside our traditional strengths, continuous innovations will be made to offer an even better experience to our users. For example, every car has its knobs, but the knobs produced by FAW-VW are different – ours offer better sense of touch and better sound. We have the ability to measure the effects through our quality assurance and R&D systems, and we will apply technologies to make sure that every change, however small, will bring users a new experience.

In order to please users, every car maker is using the backlight. To what extent do we use our backlight to please users? How do we show its sense of quality? The answer is that we have ways to measure and evaluate the effects which I don’t think any other car maker possesses.

In terms of internet connection, we will integrate the data accumulated by both FAW-VW and Volkswagen and utilize them to offer more experiences to users and meet their increasing demand for digital services.

Moreover, we have our own approach to innovation in the new energy field. Currently, the new energy vehicle (NEV) is a big issue because all car makers are currently planning their NEV strategies based on government policies rather than market conditions. The focus of our future research will be how FAW-VW can make breakthroughs in this field. I believe FAW-VW will make rapid changes and constant innovations to satisfy users’ demands.

We have a mature mechanism to respond to market changes

Dong Xiuhui: Despite the many uncertainties and challenges in the future market, we still have a lot of opportunities. Our production base is big enough to increase our output rapidly, and of course the absolute capacity is also considerable. During the thirteenth five-year plan we expect to produce one million vehicles per year. What is more, the market is getting more active and the sources of market growth are becoming more diverse. All these will bring new opportunities to the auto industry in the future, so there is a lot we can look forward to, especially in the NEV and SUV markets.

FAW-VW has a clear vision on marketing and sales. In marketing, we have powerful brands, a win-win relationship with dealers, and a strong marketing system to respond to changes. We promote the principle of “fast, adaptable and detailed” in our internal sales system, where “fast” means delegating authority to the front line. In recent years, regional functions are becoming more complete, with markets and services getting better. Now we should encourage more young people to head for the front line.

As new businesses and functions emerge we are making changes in every area, from organizational structure through personnel structure to business structure. Currently online car-hailing services and car rental are having a great impact on traditional car businesses. How do we make quick changes and adapt to the new environment? We already have a mature system in place, but in business, the key lies in how to put theories into practice. In our marketing system, we adopt the “1+1” model – carrying out campaigns every week and every month. The quality of these campaigns depends on our execution. For each auto show, we will set up very clear KPIs and customer attraction and economic indices and prepare a wide range of support materials.

We will make constant adjustments to adapt to the market and make continuous efforts to maintain permanent competitiveness.

The “2025 Strategy” is under way

Zhang Pijie: We should reflect on our mistakes and shortcomings. For instance, FAW-VW still needs to improve its independent R&D capability. And in recent years, this joint venture has been left behind in terms of SUVs, NEVs and “internet plus”. The good news is that FAW-VW has recognized all these problems and we are trying very hard to make improvements and seek solutions.

FAW-VW has great confidence in its future. In 2014, witnessed by Chinese Premier Li Keqiang and German Chancellor Angela Merkel, FAW and Volkswagen renewed our joint venture agreement for another 25 years, showing government confidence and partners’ expectations for this joint venture.

Following the “2020 Strategy”, FAW-VW is now developing its “2025 Strategy”. I will get back to all of you for your input when the strategic plan is ready. In the future, FAW-VW will continue innovation-driven development and support for green development to achieve harmony between people, society, and the automobile.


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