(Yicai) Nov. 28 -- Chinese carmaker SAIC Motor and German auto giant Volkswagen Group have strengthened their alliance after signing an extension of their joint venture agreement in China until 2040.

The renewal of the deal, inked on Nov. 26 in Shanghai, reflects the mutual recognition of the 40 years of cooperation between SAIC and Volkswagen, the Wolfsburg-based firm announced yesterday. It also shows the shared confidence in the future development of China's automotive industry and the broader Chinese economy, it added.

SAIC and Volkswagen joined hands in October 1984 when they set up SAIC Volkswagen, making it one of the first JVs in the Chinese passenger car sector. In April 2002, the pair renewed their first agreement eight years ahead of schedule.

"With this long-term contract extension, we underline the importance of this collaboration and the significance of the Chinese market for Volkswagen," said Ralf Brandstätter, a member of the board of Volkswagen for China.

"We are accelerating the transformation of SAIC Volkswagen in line with our 'In China, for China' strategy on all levels, bringing a new generation of electrified vehicles onto the road by 2026, and thus making our partnership economically and technologically future-proof," Brandstätter added.

SAIC Volkswagen plans to launch 18 new models by 2030, of which 15 will be tailored for the Chinese market. It will continue to expand its product lineup, developing new all-electric models, range-extended variants, and plug-in hybrids.

"Electrification and the transformation of the car into an intelligent vehicle are the defining trends in the automotive industry," noted Wang Xiaoqiu, chairman of SAIC. "The focus for SAIC Volkswagen is on the development of new, intelligent electric vehicles in order to maintain an industry-leading position in the field of smart technologies."

SAIC Volkswagen is based in Anting, Shanghai's Jiading district, and has production bases in Nanjing, Yizheng, Urumqi, Ningbo, Changsha, and other Chinese cities. In 2015, it surpassed FAW-Volkswagen Automotive, the JV of FAW Group and Volkswagen, to become the top-selling domestic passenger car company.

Sales of SAIC Volkswagen fell 8 percent to 1.22 million units last year from the prior one, extending a decline from a peak of 2.07 million units in 2018. However, the firm sold 512,100 units in the six months ended June 30, up 1.8 percent from a year earlier.

Volkswagen also operates Volkswagen Anhui Automobile, its third JV in China, which it set up with Jianghuai Automobile Group, better known as JAC Motors. In addition, it has allied with other Chinese firms, including Horizon Robotics and ThunderSoft, in autonomous driving, intelligent cockpit, and smart connectivity.

Volkswagen plans to bring 40 new models to the Chinese market over the next three years, with half being electrified, it said, adding that it will offer more than 30 electric models in China by 2030.

Editor: Martin Kadiev