Volkswagen to buy CELA for $5B
Volkswagen, the world’s largest carmaker, is in talks with a Chinese supplier to develop a high-performance car that can withstand a variety of harsh driving conditions, according to people familiar with the matter.
The company is also looking at buying a Japanese supplier to design the engine, a person familiar with its plans said.
The talks, which are in the early stages, could lead to a merger, the person said.
The agreement is likely to be final, the people said, asking not to be identified because the negotiations are private.
The deal would allow Volkswagen to build a more powerful version of the diesel Beetle and offer a cheaper alternative to gasoline-powered cars.
It would also make it possible for Volkswagen to develop new vehicles and extend its fleet of models, including the Golf, Golf R and Passat.
The deal also could boost its global sales, which have fallen off sharply in recent years due to global economic concerns and the ongoing global crisis in the Middle East.
The two companies have been negotiating over the last several years.
They first met in 2016 in Beijing, where they agreed to a joint venture to produce cars in China and expand production in Europe and Asia.
The agreement, which is still under negotiation, would see VW expand into China and build a joint plant in Japan, according with a statement from the European Union.
The Volkswagen Group also has factories in China.VW is expected to start producing diesel engines in China in 2020.
It has also said it would build a factory in Germany to produce a new line of diesel engines.
Volkswagen has been investing heavily in China, which has been a major supplier of cars and trucks to the U.S. and Europe.
Volkswagen said last month it plans to expand its China production capacity by more than 100,000 cars by 2020.