Skoda Will Invest in VW China Joint Venture

Volkswagen AG’s Skoda unit is buying an unspecified equity stake in VW’s Chinese carmaking joint venture with SAIC Motor Corp.

Skoda also says the partnership, SAIC Volkswagen Automotive, will spend €2 billion ($2.3 billion) over the next five years to expand the brand’s locally produced lineup in the Chinese market. The investment also will help fund development of electric powertrains, the introduction of in-vehicle Internet connectivity and what the company describes as the "digitization of individual mobility."

The partnership currently assembles Skoda models at plants in Anting, Nanjing, Ningbo and Yizheng. Last year it delivered 281,700 Skoda vehicles in China in 2015, accounting for about 25% of the brand’s worldwide volume.

Skoda aims to double its sales in China by 2020, largely with the help of three new SUV/crossover models. The first of the new models, which will go on sale in the first half of 2017, will be a large crossover based on the VisionS concept unveiled at the Geneva auto show earlier this month. Skoda also plans a variant it describes as a “crossover utility” vehicle. The only crossover in the company’s China lineup currently is the compact Yeti.