(Yicai) Jan. 13 -- FAW-Volkswagen Automobile, the carmaking joint venture of China’s FAW Group and Germany’s Volkswagen Group, plans to commit more than CNY18 billion (USD2.5 billion) on research and development annually to strengthen its position amid tough competition.

FAW-Volkswagen has already invested a total of CNY10 billion in its electrification transformation, the Changchun-based company announced on Jan. 11

FAW-Volkswagen will focus on enhancing its R&D capabilities in intelligent technologies such as smart cockpits, intelligent driving, and electronic and electrical architecture, and will work with top-notch Chinese suppliers, Deputy General Manager Wu Yingkai said, adding that 30 to 40 new suppliers are brought in every year, primarily leading companies in smart technologies.

Joint venture carmakers now face three major issues: shrunken market share, slow transformation and upgrading, and inadequate product launch speeds and competitiveness, Wu noted. 

JV automakers such as FAW-Volkswagen are facing intense competition from Chinese producers such as BYD and Nio, which have taken the lead in the electric vehicle market. Passenger car sales by traditional automotive JVs fell 11 percent to 710,000 vehicles in December from a year earlier, according to the China Passenger Car Association.

Last year, FAW-Volkswagen sold 1.66 million vehicles, down 13 percent on the year before, with its three major brands Volkswagen, Audi, and Jetta all seeing sales decline. In the next 20 months, the trio will debut 19 new models, including fossil fuel-powered autos, EVs, and hybrid cars, Wu noted.

The JV also unveiled a global expansion plan for its brands. Jetta has already started exports, while Volkswagen will begin selling its cars in the Middle East, Africa, the Association of Southeast Asian Nations, and South America this year, it said.

Editor: Futura Costaglione