(Yicai) Sept. 23 -- SAIC Volkswagen Automotive, the joint venture of China's SAIC Motor and Germany's Volkswagen Group, said it plans a “necessary” adjustment to its production base in Nanjing, following media reports that the carmaker intends to shutter the factory.

“Based on corporate strategic planning and market demand, adjustments to production bases are normal and necessary business practices,” the Anting-based company told Yicai. “These adjustments are not only an active response to current trends but also proactive planning and investment for future development.”

Bloomberg News and Reuters reported on Sept. 18 that SAIC-VW plans to close its combustion engine car plant in Nanjing next year and relocate the workers there to the JV’s plant in Yizheng, another city in China’s Jiangsu province.

With an annual output of 360,000 units, SAIC-VW’s Nanjing base makes the Volkswagen Passat and various Škoda models. The one in Yizheng mainly produces the SAIC Volkswagen Lavida.

Production and sales of Passat cars at the Nanjing base are normal, SAIC-VW noted. But based on market demand and product planning, the JV will launch new fossil fuel-powered and new energy vehicle models, which are also expected to be made at the Nanjing plant, it added.

SAIC-VW is adjusting production at its two plants in Jiangsu because the one in Nanjing is very close to the city center, giving it limited space for electrification upgrades and smart electric system support. The firm is reviewing all of its production bases nationwide to optimize capacity layout, taking into consideration such factors as industrial park facilities, Yicai learned.

SAIC-VW is improving its cost structure without compromising quality, aiming to adjust between 500,000 to one million of excess annual production capacity, Fu Qiang, the company's executive vice president for sales and marketing, said previously.

In the first eight months of the year, SAIC-VW’s sales fell 5 percent to about 700,000 from a year earlier. It has an annual production capacity of 2.5 million.

Editor: Futura Costaglione