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Volkswagen to build new plant in south China to make Seat

SHANGHAI – Volkswagen AG, along with its Chinese partner FAW Group, plans to build a plant in south China to boost its share in the Japanese car-dominated market, Reuters reported on January 20.

The new facility, Volkswage’s fifth in China, is based in the southern Chinese city of Guangzhou and will make VW’s Seat model, according to an executive from Volkswage’s China operations. The plant will have an initial annual production capacity of 200,000 units.

Volkswagen already operates four plants in the Chinese cities of Shanghai, Nanjing, Changchun and Chengdu, making Jetta, Bora, Golf, Sagitar, Audi among others. The German automaker also has a tie-up with SAIC Motor making Passat, Santana, Polo and Skoda models.

Volkswagen, the biggest foreign carmaker in China, is stepping up its presence in the country, now the world’s biggest auto market. In late 2009 VW unveiled a plan to invest $5.71 billion in China till 2011 to expand its production capacity and shore up its R&D.

The European automaker sold 1.4 million cars in China’s mainland and Hong Kong in 2009, up 36.7%. VW aims to more than triple its sales in south China by 2018, an affluent regional market that has been dominated by locally made Japanese cars.

South China, now contributing less than 10% of VW’s China sales, has been a potential market for VW to explore by competing with rivals Toyota Motor and Honda Motor, both of which have joint ventures there with Guangzhou Auto.

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