Volkswagen AG plans to cut one third of its suppliers in China in five years, but the suppliers it will retain will have a better chance to supply its joint ventures in China -- Shanghai Volkswagen Automotive Co and FAW-Volkswagen Automotive Co.

To cut costs, VW plans to buy 75 percent of the parts for the two joint ventures from the same suppliers, said Joachim Wedler, first vice president of FAW-VW at the Automotive News China Conference in Beijing on April 18.

Currently, VW only buys 20 percent of parts for the two ventures from the same suppliers.

VW will further concentrate on key suppliers by reducing the number of its suppliers in China from 750 last year to less than 500 by 2012, says Wedler.

VW aims to sell more than one million cars in China in 2008. "We will launch two or three new models every year in 2009 and 2010," adds Wedler.

Combined sales of the two joint ventures in 2007 were 925,593 units, according to Automotive Resources Asia, a unit of of J.D. Power and Associates.

On April 18, Shanghai Volkswagen took over Fiat's former plant in Nanjing, Jiangsu province, which has an annual capacity of 60,000 passenger vehicles. The Santana Vista sedan will be the first model to be built in Nanjing.

Also, FAW-VW has started making the Jetta compact car in its Chengdu plant in Sichuan province with an initial capacity of 20,000. "For sure the production capacity will increase in the future," says Wedler.

VW will bring its latest and most advanced powertrain technology to China, says Wedler.

VW will replace the engines of the Sagitar sedan and China's best-selling luxury car, the Audi A6L, in an effort to reduce the carbon dioxide emissions by 20 percent in China by 2010, he adds.

Welder says Volkswagen is eager to introduce its latest diesel technology to China, but he says the poor quality of diesel fuel in China and restrictions on diesel cars in major Chinese cities have made it difficult to do so.