FAW VW to start building Chengdu base in May

Shanghai, March 26 (Gasgoo.com) FAW Volkswagen (FAW VW) will start construction in May of its car manufacturing base in southwestern China's Chengdu city, Sichuan province, local media reported today.

The 700-million-euro project will reach an annual production capacity of 350,000 vehicles after it is completed and put into operation. It is the expansion of FAW's current Chengdu plant, which has a capacity of around 20,000 units at present and produced 14,000 Jetta cars last year.

Considering weak growth of auto market in major cities, FAW VW is eying expansion to the less-developed western regions in China, according to an official from the venture's sales company.

Industry analysts said the Chengdu manufacturing base built by FAW VW will not only help sharpen the joint-venture's competitiveness but also promote the auto industry of Sichuan province.

FAW VW has recently agreed to take over the Chengdu subsidiary from FAW Group for 502.35 million yuan ($73.46 million), an FAW spokesman said on March 16. FAW's Chengdu plant made a net profit of 354.66 million yuan in 2008.

Volkswagen also has a car-making venture with China's biggest automaker SAIC. The German automaker announced its plan last month to double its vehicle sales in China to 2 million units by 2018 and add four models each year during the period.