What does it mean that Volkswagen is divided into FAW and SAIC?
3 Answers
Different establishment times: SAIC Volkswagen was established in 1985, while FAW-Volkswagen was officially established in 1991. Different models: The first model of SAIC Volkswagen was the Santana, and the first model of FAW-Volkswagen was the Jetta. Different shareholdings: FAW holds 60%, and SAIC holds 50%. Cooperation period: SAIC Volkswagen was established in 1985, during the early stages of China's reform and opening-up, while FAW-Volkswagen started in 1991, coinciding with the favorable opportunities of the reform and opening-up. Therefore, SAIC Volkswagen was established seven years earlier than FAW-Volkswagen. FAW has been cooperating with Volkswagen for a total of 28 years, so the seven-year gap is not insignificant. Models: SAIC Volkswagen has the Santana, which achieved considerable success when it first entered the market. FAW-Volkswagen has the Jetta. Although both are Volkswagen brands, there is significant competition between these two models. Currently, FAW-Volkswagen primarily focuses on sedans, while SAIC not only has sedans but also boasts strong capabilities in SUVs and MPVs. Therefore, SAIC has an advantage in terms of model variety. Shareholding: FAW holds approximately 60% of the shares, making it the largest shareholder. Volkswagen holds 30%, and Audi also has a 10% stake. In contrast, SAIC holds 50% of the shares, with Volkswagen Group holding 40%, and the remaining 10% owned by Volkswagen China. Of course, these are just general shareholding ratios, but it is evident that FAW has a more advantageous position.
Volkswagen operates in China through two separate joint ventures, namely FAW-Volkswagen and SAIC Volkswagen. This structure dates back to the 1980s when Volkswagen entered the Chinese market and needed local partners to establish manufacturing facilities. FAW-Volkswagen is a partnership with First Automotive Works (FAW) Group, primarily producing models like the Bora and Magotan, with a focus on northern markets and factories located in Northeast China. SAIC Volkswagen, a joint venture with Shanghai Automotive Industry Corporation (SAIC), manufactures vehicles such as the Lavida and Passat, targeting southern regions and major metropolitan areas. This dual-operation strategy allows Volkswagen to better localize design and sales, avoid model overlap, and share German technology efficiently. Essentially, it's a smart market strategy that has helped Volkswagen become China's top-selling automotive brand. However, it also means consumers should check which joint venture manufactures their desired model, as there might be slight variations in features or services. Historically, this setup was established during China's reform and opening-up period when the automotive joint venture trend began, making Volkswagen's two-partner approach a strategic choice at the time.
Volkswagen's division into FAW-Volkswagen and SAIC-Volkswagen is essentially a business strategy. As a global brand, Volkswagen has chosen multiple partners in China to increase its market share. FAW-Volkswagen focuses on mid-to-high-end models like the Audi A4 and Sagitar, while SAIC-Volkswagen promotes entry-level Volkswagen models such as the Santana and Tiguan. The two companies operate independently but share R&D platforms, such as the MQB chassis technology. This approach allows them to cover different regions—FAW in the north and SAIC in coastal cities—avoiding internal competition while expanding the sales network. From an economic perspective, this enhances production efficiency and brand exposure, while also offering Chinese consumers a wider range of choices. Additionally, the joint venture model helps develop local supply chains and reduce manufacturing costs. Essentially, it's about how Volkswagen secures its market presence in China through multiple entry points, ensuring technology localization without compromising brand image. If you've been in the automotive industry for years, you'd notice this strategy has kept Volkswagen's sales far ahead of the competition.
