Volkswagen AG has said that it plans to build a greenfield plant in south China with a maximum capacity of 300,000 units a year in the world’s biggest auto market. Construction of the facility, located in Foshan, Guangdong province, will start by the end of this year, with operation scheduled to begin in mid-2013.
The Foshan plant is part of VW’s commitment to invest about 6 billion euros ($7.2 billion) in China by 2012. It will be its sixth plant, jointly run with major Chinese auto maker FAW Group and the first in south China, where Toyota Motor and Honda Motor dominate.
The European auto maker also makes cars in China in a tie-up with domestic leader SAIC Motor Corp. It aims to double its capacity in China to 3 million units by 2013 to 2014, CEO Martin Winterkorn said. In the first five months, Volkswagen sold 778,000 vehicles in China, up 48 per cent from a year earlier.
China, which eclipsed the United States as the world’s top auto market last year, has been a major bright spot amid a global industry downturn and a safe haven for foreign auto giants. French car maker PSA Peugeot Citroen aims to start building its third China plant with partner Dongfeng Motor Group by the end of this year, while General Motors is also looking for a site to build a new China plant.
With its affiliates, Volkswagen operates plants worldwide; it also owns other auto brands, including Audi and Bentley. The Volkswagen Group consists of 342 Group companies, which are involved in either vehicle production or other related automotive services.