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Volkswagen to open two new plants in China

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German carmaker Volkswagen will build two new manufacturing facilities in China, it announced in the presence of the German and Chinese leaders.

The Wall Street Journal reports that German Chancellor Angela Merkel and Chinese Premier Li Keqiang were present at the announcement of the two plants, which will be built in the eastern Chinese city of Qingdao and the northern city of Tianjin.

The company said in a statement the two locations were chosen by Volkswagen along with joint venture partner FAW. The key site factors were high qualification levels and the infrastructure available.

Furthermore, Tianjin is the location of a new production plant for dual-clutch gearboxes (DSG) for Volkswagen in China that is due to be inaugurated at the end of 2014. Together, the two partners are to invest about two billion euros in the expansion of production capacities.

"China has become our largest and most important market. To satisfy the demands of our customers in the country, we are engaging in a further substantial expansion of our capacities in China together with our Chinese partner FAW Volkswagen," Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft said in the statement.

It is not yet clear what the capacities of the two new plants will be or when they will be operational.

Volkswagen currently has two joint ventures in China. Apart from the FAW-Volkswagen partnership, the company has as Shanghai-Volkswagen joint venture.

Earlier this week, French car maker PSA Peugeot Citroen announced it will build a new manufacturing plant in the city of Chengduin in Western China with its new shareholder Dongfeng.

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