VW set to recycle powertrains

First industrial operation in China to rebuild auto engines and transmissions

BEIJING - China's first passenger vehicle powertrain remanufacturing facility recently began operation in the northeastern city of Dalian at an engine plant jointly operated by Volkswagen Group and its local partner FAW Group.

Volkswagen FAW Engine (Dalian) Co Ltd invested about 100 million yuan in the plant that can refurbish 5,000 engines a year in its initial stage. The number is set to increase to 15,000 units a year in 2014.

At the outset only EA888 series engines will be rebuilt, with transmissions and other engines to follow later, said the joint venture.

It is the first time Volkswagen has built a powertrain remanufacturing facility outside of Germany, said Karl-Thomas Neumann, president and CEO of Volkswagen Group China.

He said that the move is further proof that Volkswagen is bringing advanced technologies to China.

Volkswagen began remanufacturing major auto components in 1947. By 2008 the company had recycled 7.7 million engines and 2.8 million transmissions.

Other major automakers including Toyota, Ford and PSA Peugeot Citroen have all been rebuilding powertrains for many years, but the concept is new in China.

Remanufacturing factories disassemble old engines and transmissions, which are then carefully checked. Usable components are retained and renewed, while worn out parts are replaced.

"We guarantee that remanufactured engines have the same quality and the same two-year, 60,000-km guarantee as new engines," said An Xin, director of the project.

He noted that rebuilt engines and transmissions are not used in new cars, but only in the after-sales market at much lower prices than new powertrains.

An said the recycling rate is now just 20 percent, but the company aims to raise to the figure to 60 or 70 percent in the future.

Compared to manufacturing all-new components, every 10,000 remanufactured engines can save 14.5 million kWh of electricity and reduce 600 tons of carbon dioxide emissions, according to statistics provided by the company.

Volkswagen FAW Engine (Dalian) Co Ltd, established in 2007, now has the capacity to produce 300,000 engines a year. The company will more than double output to 750,000 a year in 2012 to meet demand from Volkswagen's rapid expansion in the country.

The German auto giant now has two vehicle joint ventures with combined capacity of about 2 million cars a year in China, its biggest market worldwide since 2009.

Sales of Volkswagen in the nation in the first seven months to July increased 16 percent to 1.29 million cars.