Volkswagen to add new plant in China, invests $224 million image

Volkswagen AG (VOW.XE), Europe’s largest carmaker said Monday it agreed with Chinese joint-venture partner SAIC Motor Corp. (600104.SH) to build a new plant in China’s far west area.

Volkswagen said the agreement with China’s SAIC Motor Corp. foresees total investment of about €170 million ($224 million).

“As a pioneer of the Chinese automotive industry we gave important momentum to China’s industrial development and to German-Sino economic relations. Together with our partners we will now carry this pioneering spirit into Western China as well,” Volkswagen Chief Executive Martin Winterkorn said in a statement.

The German automaker already has several production facilities in China, all located in the east, with the exception of one in Chengdu, a city in the western province of Sichuan.

The group last year sold 2.3 million vehicles in China and plans to invest 14 billion euros in the country between 2012 and 2016.

Volkswagen also said that it agreed to extend the joint venture formed in 1991 with FAW, its second Chinese local partner, by a further 25 years.

Volkswagen overtook Toyota last year to become the world’s second-biggest automaker by deliveries behind General Motors Corp., selling nearly 8.3 million vehicles.