VW Will Not Build a Plant in Changsha, China image

Today, October 24th, VW denied the media report according to which it plans to build a new assembly plant in Changsha, China, for $1.6 billion.

“There is no such plan,” said Eric Felber, a spokesman for the German auto maker.

Tuesday, Bloomsberg news reported that VW plans to build this new facility in Changsha to increase its production capacity by more than 10%. The plant was said to have a capacity to manufacture 300,000 units annually and the Changsha National Economic and Technical Development Zone said the automaker will invest 10 billion yuan.

“If Volkswagen asked me, I would say ‘Don’t build this plant’, because you don’t want to have overcapacity,” Jochen Siebert, Shanghai-based managing director at JSC Automotive Consulting, said. “We have extreme competition already.”

VW, which already has JVs with SAIC Motor and China FAW, said it plans to invest 14 billion euro by 2016 to increase production in the country. The automaker’s two Chinese JVs are expected to increase manufacturing capacity by 38% by the end of this year, and reach capacity of 2.81 million in 2013. China is VW’s largest market, where the automaker sold 2.26 million vehicles last year.