VW to set up new factory in China

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From The Financial, and VW:

The Volkswagen Group is to build a new vehicle production plant in Yizheng, Jiangsu Province, as part of its long-term growth strategy for China.

According to Volkswagen, the contracts were signed today by Prof. Dr. Jochem Heizmann, Member of the Board of Management of Volkswagen Aktiengesellschaft with responsibility for ‘Group Production’, and Dr. Winfried Vahland, President and CEO of Volkswagen Group China, together with representatives of Shanghai Volkswagen. The plant in Yizheng, Eastern China, will start operating in 2013 and has a maximum annual production capacity of 300,000 vehicles.

“China is one of the most important automotive markets of the future and a dynamic growth driver for the Volkswagen Group”, Heizmann said at the signing ceremony. “Together with our Chinese partners we plan to double our production capacity to three million vehicles by 2013/14. The new plant in Yizheng is a central element of these plans. The Volkswagen Group is thus laying the foundations for consolidating and expanding its leading position in China”, Heizmann continued.

“With more than 950,000 vehicles delivered in the first half of 2010, Volkswagen Group China has exceeded deliveries in the record year of 2009 by 45.7 percent”, Vahland added. “This strong performance further confirms the success of our young and efficient model range. The new plant in Yizheng makes sure we will be able to meet growing demand from our Chinese customers in future, too.”

In view of the dynamic developments on the Chinese automotive market, the Volkswagen Group added a further €1.6 billion this April to its investment program for China for the period to 2012, bringing the total to €6 billion. These investments are financed from the cash flow of the Chinese joint ventures. Some of the funds will be used to double local production capacities by 2013/14. To this end, annual capacity at both the Nanjing and Chengdu plants will be increased to 300,000 to 350,000 units and two new factories will be built. Apart from the Shanghai Volkswagen plant in Yizheng, the Volkswagen Group and FAW-Volkswagen will also be constructing a new vehicle production plant in Foshan, Southern China.

According to present plans, the Yizheng plant will begin producing up to 300,000 vehicles per year from 2013. For this purpose, a complete production facility with press shop, body shop, paint shop and assembly hall will be built. Some 4,000 direct jobs will be created at the factory.