Volkswagen Opens China Factory With 300,000 Unit Annual Capacity

Volkswagen (VOW) AG, Europe’s largest automaker, opened a new factory today in the southern Chinese province of Guangdong as it seeks to overtake Toyota Motor Corp. (7203) to become the industry’s biggest company by deliveries.

The plant, set up with Chinese partner FAW CAR Co. in the city of Foshan, has an initial capacity to produce 300,000 units a year, Volkswagen said in an e-mailed statement. Capacity will double in the factory’s second phase, it said.

Volkswagen said in March it planed to increase its production in China 60 percent by 2018. The Wolfsburg, Germany-based company’s sales in China surged by almost half last year and boosted its share of the country’s passenger vehicle market this year by 3 percentage points to 22 percent by the end of August.

The Foshan plant, which will produce new Golf model cars, will create 6,500 jobs in its first phase, according to the statement. Volkswagen delivered 2.05 million vehicles in China during the first eight months, 17.9 percent more than a year earlier, the company said.

The carmaker announced in April that it plans to expand its model line-up in China by 29 percent by 2015. Volkswagen aims to offer 90 cars, sport-utility vehicles, vans and heavy trucks in the world’s biggest vehicle market compared with about 70 models now. VW is targeting at least 3 million deliveries in China this year, Jochem Heizmann, head of the carmaker’s Chinese operations, said in April.

China, already VW’s biggest national market, may expand to account for 37 percent of the German carmaker’s global volume in 2015 from 28 percent in 2010, according to LMC Automotive research company.

VW’s 9.8 billion-euro project to build factories and develop models in China by 2018 will be the country’s largest-ever automotive-investment program, Chief Executive Officer Martin Winterkorn said in April. The company will expand its workforce by 33 percent to more than 100,000 employees in the period, according to the carmaker.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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