One of Volkswagen’s two main joint ventures in China has launched an emergency “survival plan” aimed at cutting costs by 3 billion yuan (US$362 million) this year, the South China Morning Post reported.

The Hong Kong-based newspaper, citing Ji Yongliang, spokesman for First Auto Works-Volkswagen in Changchun, said the plan would raise productivity, the level of local content and outsourcing.

The joint venture company, whose products include the Audi brand and Volkswagen’s Golf, Bora and Jetta cars, plans to save 2.8 billion yuan by cutting spending on parts and components, which account for 70 percent to 80 percent of a vehicle’s costs, mainly by using domestic parts. It aims to raise the local content from 60 percent to 80 percent.

The company also planned to cut the workday to two shifts from three while raising productivity levels, the paper said.

The new target for each worker is 29.2 cars a year this year, rising to 37.2 by 2009.

The target for this year is to produce one Jetta in 30 hours, down from the current 35 to 38 hours.

The firm will also cut costs by outsourcing as many services as possible outside its core business, such as employee dining and logistics.

The joint venture lost 400 million yuan in the first four months of this year, the paper said, citing industry sources.

In the first quarter, the Changchun plant and Volkswagen’s other main factory, a joint venture with Shanghai Auto Industry Corp., sold a combined 16,000 vehicles, down more than 20 percent from a year earlier.

(Shenzhen Daily June 7, 2005)