Volkswagen tops up its China spending budget

Volkswagen has added US$2.1 billion to its investment budget for China, bringing its total spending pot for the country to US$8 billion over the next the three years, the Financial Times reported. Most of the money will go toward the construction of two new plants. The German carmaker, already the clear market leader in China, wants to reach sales of 2 million units by 2018, up one-third on last year’s figures. The Chinese industry association expects sales to grow by 20% to 16.5 million units in 2010. This comes after a massive 45% jump in car sales last year. With the likes of General Motors, Hyundai, BMW, and Nissan all planning to step up production in China, there are fears of overcapacity. Industry executives defend their strategies by noting that only 41 in 1,000 Chinese possess a car. In Germany there are more than 500 cars per 1,000 inhabitants.