Government support

Governments at various levels in China are also backing the development of electric and other new-energy vehicles.

Owners of purely electric cars in five pilot cities - Shanghai, Changchun, Shenzhen, Hangzhou and Hefei - have been eligible for a subsidy of 60,000 yuan since June this year. Owners of plug-in hybrid cars can receive subsidies of up to 50,000 yuan.

Volkswagen has a long history of developing electric cars. In 1900, its 25-year-old chief designer Ferdinand Porsche stunned the world with the electric Lohner-Porsche.

With electric hub motors on the front wheels, the Lohner-Porsche was lauded by the press as an "epoch-making masterpiece".

Despite its aggressive EV strategy, Neumann said Volkswagen will further tap potential of internal combustion engines by slashing fuel consumption and emissions.

In 2007 Volkswagen Group China began introduction of two of its core BlueMotion technologies - the TSI engine and DSG transmission.

The TSI - turbocharged stratified injection - engine enables highly efficient combustion of fuel while the DSG - or double-shift gearbox - transfers power smoothly and efficiently for optimal use of energy.

The carmaker now has TSI engine production sites in Dalian, Shanghai and Changchun. It also has a DSG plant in Dalian.

Volkswagen's China-made models with TSI engines and DSG transmissions include the Lavida, Magotan, Sagitar and Skoda Octavia Mingrui.

Target reached

In May, the carmaker announced that it reached the target set in 2007 to cut fuel consumption and emissions in its China-made fleet by 20 percent, mainly due to its TSI engines and DSG transmissions.

The efficient technologies have also helped Volkswagen Group boost sales.

In the first three quarters of this year, Volkswagen's China sales surged by 39 percent year-on-year to 1.48 million vehicles. The figure, up from 1.4 million units for the whole of last year, enabled the German carmaker to maintain its two decades of leadership in China's passenger car market.