Caas Signed Supply Agreement With Vw Joint Venture in China

by : Anthony Fontanelle

China Automotive Systems, Inc., a leading power steering components and systems supplier in China, announced that its subsidiary Jingzhou Henglong Automotive Parts Co. has entered into an agreement with FAW Volkswagen to supply sophisticated power steering systems.

The agreement, with a term of one year and an option to extend for a further two years, will start without delay. The power steering systems will be installed in VW's Jetta and Audi vehicles in China. The first commercial shipment will be delivered by China Automotive Systems on May 21st 2007. Other terms of the contract were not disclosed.

The VW Jetta, produced since 1980 and has spanned five generations, is a sedan version of Golf. Its name came from the Jet stream, following the automaker's long tradition of naming cars for various winds. The Jetta has proven to be a clever move for VW. This is because the car became the best-selling European car in Canada and the United States. To gauge its salability, as of 2005, the European automaker sold over 6.6 million Jettas around the globe. In the United States alone, VW sold over 2.2 million units.

Over the years, the Jetta has been offered in two and four-door sedan and five-door station wagon variants. Since its original version, the Jetta has expanded in both size and influence. As a fact, it has etched a milestone in the automotive global arena same with its sibling Beetle.

The VW Type, popularly known as the Beetle, was introduced to the market in 1938. The car is made prominent by its shape as well as distinct auto parts like the . Even though scorned for its queer styling, rough ride, noise, and weak power, the Beetle has ultimately become the most produced and the longest automobile for a sole design. The car remained a hot seller even as tough competition involving refinement of the rear--wheel drive conventional subcompacts invaded the realm.

The German automaker, at present, is concentration on the enhancement of its old product lines. It is also considering new and innovative models to pull more purchasers closer.

With this supply agreement, CAAS has entered into VW's global sourcing system. According to the China Association of Automobile Manufacturers, two key VW joint ventures in China, FAW VW and Shanghai VW, together produced and sold over 680,000 passenger cars in China in 2006. FAW Volkswagen, the leading passenger car producer in China, experienced a hearty 40 percent year over year unit sales growth last year. In the first quarter of 2007, FAW Volkswagen's production and sales unit growth accelerated to 55 percent up from same period in 2006.

"This agreement represents a major step towards our goal of becoming the number one producer in the power steering market in China. After a decade long effort of improving our product R&D, quality control, production scale and after-sale customer services, we have finally become a tier one supplier to one of the largest global automakers," said Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.

Chen added, "We are very excited about this opportunity to provide reliable and dependable support to Volkswagen's rapid growth in China. As China's passenger vehicle OEM market continues to grow, we remain focused on expanding our market share and strengthening our relationships with major OEMs, like Volkswagen, by providing high quality and competitively priced products. In addition, we continue to improve product quality and ramp up production capacity to prepare for potential opportunities outside of China."

VW is also expanding its partnership with other auto giants. Porsche, is reported to be contemplating on the possibilities inherent in its beefed-up partnership with Volkswagen. And hybrid technology is just one of the many options on the table. The possible sharing of technology also means access to a large development team where Porsche can offer the best of hybrid engines. The Cayenne and Panamera are the cars Porsche says it will offer as full hybrids, meaning that the vehicles can travel up to speeds of 20 to 25 miles per hour without kicking on the gasoline engine.