New Xinjiang plant for VW

Sino-German joint venture Shanghai Volkswagen Automotive Co held a contract signing ceremony and laid the foundation stone for a plant in the Xinjiang Uygur autonomous region on May 28 as part of its plans to tap China's vast western market.

The plant will have an initial annual production capacity of 50,000 vehicles when it starts operation in 2014 and will be the first passenger vehicle factory in Xinjiang, the company said.

The agreement on the project was first signed in April at Volkswagen headquarters in Wolfsburg, Germany witnessed by visiting Premier Wen Jiabao and German Chancellor Angela Merkel.

Volkswagen Group and SAIC Motor Corp, the two partners in the venture, will together invest 170 million euros ($210 million) in the Xinjiang plant, according to a company statement.

Shanghai Volkswagen has been moving aggressively to boost production in China with a 300,000-unit plant under construction in Yizheng, Jiangsu province and another with same designed capacity in Ningbo, Zhejiang province. Both will be ready in 2013 to augment existing facilities in Shanghai and Nanjing.

The joint venture said that the Xinjiang project enables it to reach outside the Yangtze River Delta and expand its business to western China.

Previous media reports said the Xinjiang plant, the joint venture's seventh in China, will first produce a compact car.

Volkswagen's other joint venture in China with FAW Group is also gearing up to expand. In addition to existing facilities in Changchun and Chengdu, the partnership is building a new plant in Foshan, Guangdong province, which will start operation next year.

According to a plan announced by Volkswagen last September, its joint ventures in China will together invest 14 billion euros (17.3 billion) between 2012 to 2016 to expand capacity and introduce new models.

The group plans to increase combined annual capacity at its joint ventures to 3 million vehicles next year or in 2014, up from the current 2 million units.

hantianyang@chinadaily.com.cn