(Yicai) Sept. 23 -- SAIC Volkswagen Automotive, the joint venture between China's SAIC Motor and Germany's Volkswagen Group, plans to adjust its production base in Nanjing in Jiangsu province.

"Based on corporate strategic planning and market demand, adjustments to production bases are normal and necessary business practices," SAIC Volkswagen told Yicai. "These adjustments are not only an active response to current trends but also proactive planning and investment for future development."

Yicai contacted SAIC Volkswagen after Bloomberg and Reuters reported on Sept. 18 that the JV plans to close its factory in Nanjing next year and relocate workers to its plant in Yizheng, another city in Jiangsu province. With an annual output of 360,000 units, SAIC Volkswagen’s Nanjing base produces the Volkswagen Passat and various Škoda models. The one in Yizheng mainly produces the SAIC Volkswagen Lavida.

Production and sales of Passat cars at the Nanjing base are normal, SAIC Volkswagen noted. But based on market demand and product planning, the JV will launch new fossil fuel-powered and new energy vehicle models, which are also expected to be made at the Nanjing plant, it added.

SAIC Volkswagen is adjusting production at its two plans in Jiangsu because the one in Nanjing is very close to the city center, meaning that it has limited space for electrification upgrades and smart electric system support. The JV is actually reviewing all its production bases to optimize capacity layout, considering factors such as supporting facilities in industrial parks, Yicai learned.

SAIC Volkswagen is improving its cost structure without compromising quality, aiming to adjust between 500,000 to one million units of annual production capacity, Fu Qiang, the company's executive vice president of sales and marketing, said earlier.

In the first eight months of the year, SAIC Volkswagen's sales fell 5 percent to about 700,000 units from a year earlier. Its annual production capacity stands at 2.5 million units.

Editor: Futura Costaglione