As the car demand in China rises, Volkswagen plans to double production capacity in the country by constructing a new plant in southern China, more specifically, in the Foshan, Guangdong province. According to VW's statement, this new plant will have a capacity to build 300,000 vehicles each year and will start operations in 2013.
Within four years, VW plans to double its production capacity in China to 3 million vehicles with its 6 billion euros ($7.2 billion) investment. Meanwhile, Daimler AG, the world's second-largest luxury carmaker, last month disclosed plans to build an engine factory in China as part of a 3 billion-euro investment.
Daniel Schwarz, an analyst at Commerzbank AG in Frankfurt, said that VW is doing this in an attempt to catch up in the south where they currently aren't as strong as further north. He explained that in the mass segment, the company has to accomplish the value creation inside China.
Last month, China's passenger-car deliveries rose by 26% from a year earlier to 1.04 million units, according to the China Association of Automobile Manufacturers.
For the first five months of the year, sales increased 55% to 5.68 million units. VW said that sales in the country through the end of May climbed by 48% to a groundbreaking 778,000 vehicles.