Volkswagen to Add Two Plants in China

Chinese auto workers on the assembly line at the FAW-Volkswagen plant in Chengdu, southwest China's Sichuan province, during the visit of German Chancellor Angela Merkel. Agence France-Presse/Getty Images

SHANGHAI— Volkswagen AG  said Monday it will add two car-making facilities in China as part of its plan to raise production capacity in the world's largest auto market.

VW will team with state-run FAW Group Corp. to build the plants in the eastern Chinese city of Qingdao and the northern city of Tianjin, the German auto giant said. The two parties will spend about two billion euros ($2.72 billion) in building the plants, it said.

"With these investments, Volkswagen is clearly expressing its commitment to the Chinese market," said Jochem Heizmann, president of VW in China.

China is the largest market for Volkswagen, as the company delivered more than a third of its cars to Chinese consumers in the first quarter of this year, according to VW Group. In the period from January to May, VW and its Chinese partners reported an 18% rise in car sales to 1.5 million vehicles.

VW has said that, with its Chinese partners, the company would invest 18.2 billion euros through 2018 to increase annual production capacity in China to more than four million vehicles from 3.3 million.

VW and FAW signed the deal in Beijing on Monday, when German Chancellor Angela Merkel met Chinese Premier Li Keqiang. VW also operates a car-manufacturing joint venture with Shanghai-based SAIC Motor Corp.

SOURCE:http://online.wsj.com/