In a statement from Volkswagen in Beijing, the company said the plant would be operational by 2018 but declined to give the exact cost of the project, thought by insiders to be more than $3 billion. VW has kept up its expansion in China despite the slowdown in sales and the general economy. 2016 has seen the slowest growth in the region for 25 years.
VW Beijing said that the group is aiming to hit an annual production capacity of five million by 2020, countering its statement of 2015 that it would reach that figure by 2019.
“Generally, we stay true to our investment plans, with some modifications of course which is normal and which will always happen,” VW China chief Jochem Heizmann told reporters in Beijing last month. “We will use these capacities and this will give us more flexibility to react to changes in the market.”
Heizmann also said that the company would invest $4.49 billion with its joint venture partners in China in 2016.
Volkswagen sales grew 6.4% in China in the first quarter of 2016, compared to the same period last year. This could be seen as a considerable recovery from the 3.4% decline in sales for the whole of 2015.
Interestingly, the announcement of this new plant comes almost exactly a year since the carmaker opened a new assembly plant in Changsha. That factory is operated by Shanghai Volkswagen Automotive Co., a 50-50 joint venture between Volkswagen and SAIC Motor Corp, and has a capacity of 300,000 VW brand and Skoda vehicles per year. At the time, Heizmann said: “The plant in Changsha is a key step in our Go South strategy in China. This new facility will bring us nearer to our Chinese customers and also improve the quality of our supply chain.”