Volkswagen and PSA to invest more than $1.52 billion in China

Article by Christian A., on February 17, 2011

Chinese state media recently reported that automakers including PSA/Peugeot-Citroen and Volkswagen AG will invest more than JPY10 billion ($1.52 billion) in manufacturing capacity in China's Guangdong province in 2011.

Major greenfield projects lined up for Guangdong include VW's car plant with Chinese state-owned FAW Group and a joint facility between Peugeot and China Changan Group, according to a Xinhua report citing the local economic planner.

The report added that Toyota Motor Corp. and Honda Motor Co., which have their manufacturing base in Guangdong, are expanding their vehicle and engine facilities.

The investments will increase Guangdong’s carmaking capacity, which at the end of 2010 came to 1.32 million vehicles, ranking second in China and equivalent to about 9.5 percent of the country’s 2010 overall car output.

Global industry giants saw strong car sales over the past two years in China, where increasing wealth has pushed auto sales to record highs. However, growth in the once-booming market is slowing to a more rational pace of 10-15 percent in 2011 after the government scrapped most of its market incentives.

However, some carmakers like General Motors Co. are thinking about adding capacity. [via autonews - sub. required]

Topics: psa, vw, investment

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