2_800x533_L_1412520354.jpg)
HAMBURG/BERLIN (Reuters) - Volkswagen (DE:VOWG_p) will extend its joint venture with China FAW Group Corp [SASACJ.UL] by 25 years, a person familiar with the matter told Reuters, as it targets an increasing share of the world's biggest car market.
European and U.S. carmakers are keen to raise their presence in China, but have been confined to owning 50 percent or less of joint venture companies run together with Chinese enterprises.
VW, one of the first global automakers to establish production facilities in China during the 1980s has the biggest manufacturing output and has been working with FAW for over two decades.
Europe's largest carmaker said in July it will invest 2 billion euros (1.57 billion pounds) with FAW to build two more assembly plants. The German group currently operates eight car-making factories and nine component plants in China.
"Enhancing ties with its Chinese partners is a must for VW which is overly dependent on the market," Frankfurt-based Bankhaus Metzler analyst Juergen Pieper said.
Wolfsburg-based VW, which also has a joint venture with China's SAIC Motor Corp Ltd (SS:600104), last year sold almost 3.3 million cars in China, about a third of its record global deliveries of 9.73 million.
Nine-month group deliveries in China, including the Audi luxury brand and sports-car maker Porsche, jumped 15 percent to 2.72 million autos, VW said on Friday.
The contract extension was signed on Friday on the occasion of talks between German Chancellor Angela Merkel and Chinese Premier Li Keqiang in Berlin.
VW has also been in talks with FAW for some time about a possible increase of its 40-percent holding in the venture.
Many industries in China have come under the spotlight as authorities step up efforts to bring companies into compliance with an anti-monopoly law enacted in 2008. The car sector has been under particular scrutiny amid accusations by state media that global carmakers are overcharging customers.
Still, Keqiang, in a guest commentary for German newspaper Die Welt published on Oct. 8, said Chinese authorities will "favourably examine" VW's quest for a larger stake in FAW. In return, his government hopes Germany will admit Chinese companies to bid for German high-speed rail projects.
Separately, German automaker Daimler (DE:DAIGn) and Beijing Automotive Industry Corp
European planemaker Airbus (PA:AIR) said it will announce a deal with China on Friday, which sources expect to include an order for jets plus a letter of intent for a cabin completion plant.
(Reporting by Jan Schwartz and Andreas Cremer, Additional reporting by Victoria Bryan; Editing by Maria Sheahan, Philipp Halstrick and Elaine Hardcastle)