FAW-Volkswagen, the joint venture between China's second largest auto maker and Volkswagen of Germany, lately signed agreements with 22 auto parts manufacturers, to prepare for its vehicle manufacturing project in Chengdu. 

Total investments of these manufacturers reach RMB 3.9 billion, including the production of chassis, car bodies, bumpers, seats and panels. Amongst the 22 manufacturers, five ones are JVs from the Fortune 500.

In May 2009, FAW-Volkswagen launched the construction of its car manufacturing plant in Chengdu, which involves an investment of EUR 550 million and is located in Chengdu Economic and Technological Development Zone. In the first phase of this project, the annual auto output will reach 150,000, and it will be enlarged to 350,000 in future.

In 2008, Chengdu's auto output volume was 71,000. Although the city is one of the major auto sales markets in China, it is not a manufacturing base. Furthermore, Sichuan Province, where Chengdu locates, takes 15% of the country's total population, but the auto reserve in Sichuan only accounts for 7.5% of the nation's total reserve.

This opinion coincides with the city's plan, in which Chengdu's auto output volume aims at 600,000 by 2012 and one million in 2017. Auto manufacturing is now one of the key pillar industries encouraged by Chengdu government.

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