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Business

Volkswagen opens southern China car plant as sales boom

Volkswagen has opened a new car factory in southern China, and announced plans to build another one nearby to double capacity. China’s auto market play’s a key role in VW’s bid to become the world’s biggest carmaker.

The Foshan car plant in the southern Chinese province of Guangdong would have a capacity of 300,000 cars annually, Germany's Volkswagen group said Wednesday as it launched production at the site.

At the plant, the German car giant would produce its latest Golf model, as well as in a second phase the A3 model of its Audi subsidiary, Volkswagen (VW) said.

The move coincides with a slump in sales by carmakers within Europe and an announcement last week by Audi that it would open a plant in southern Brazil

Latest of five new plants

“The Foshan branch will offer 6,500 skilled jobs in the first phase, cultivate new talents and improve infrastructure for a more prosperous, more innovative, and more sustainable auto industry in south China,” said Jochem Heizmann, the head of Volkswagen in China.

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The future of VW lies overseas

The Foshan plant is the latest of five new car factories to be inaugurated by Volkswagen in the Asian country this year. Attempting to become the world's biggest auto maker by 2018, the 12-brand carmaking group has earmarked investments in China worth 14 billion euros ($18.8 billion) until 2016.

The group seeks to boost its China production from currently 2.8 million vehicles to about 4 million in 2018. China has become Volkswagen's largest market, soaring 23 percent last year alone.

VW China Chief Heizmann also said the group was planning to built another car factory at the Foshan site, seeking to double production in four years.

Volkswagen operates the Foshan plant in a joint venture with Chinese carmaker First Automotive Works (FAW). The German manufacturer announced Wednesday, it would seek to raise its stake in the partnership from currently 40 percent to 50 percent. In Volkswagen's other Chinese joint venture with Shanghai Automotive Industry, the German car group already owns already 50 percent.

Europe sales down

Last week, the European Automobile Manufacturers' Association ACEA said the car sales figure in Europe during the January-August period was the lowest since it started keeping track in 1990.

For August, new car registrations fell 5 percent from a year ago to 653,872, the association said.

Germany saw a 5.5 percent drop, despite a stronger economy than in other members of the 17-county eurozone. Registrations fell 10.5 percent in France, 18.3 percent in Spain, and 6.6 percent in
Italy. Britain's was the only major market to expand, rising 10.5

Germany's Volkswagen Group was off 11.2 percent in August while France's PSA Peugeot Citroen slid 17.3 percent.

Luxury brands did better. Daimler's Mercedes was up 8.9 percent, and BMW AG rose 9.5 percent.

uhe/ipj (dpa, Reuters)

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