FAW–Volkswagen Automotive Company announced it would build a fifth vehicle factory, in the port city of Tianjin, as it looks to increase its exposure to growing demand in the world’s largest vehicle market.
FAW-VW is a joint venture established in 1991 between Volkswagen and China’s FAW Group, producing Volkswagen- and Audi-branded passenger vehicles for sale mainly in China. It is one of VW’s two main vehicle-producing joint ventures in the country, with production at around 1.65m vehicles in 2015.
Volkswagen’s other joint venture in China is Shanghai-Volkswagen, with production of around 1.72m units last year. VW group sales in mainland China and Hong Kong total led 3.55m units last year, including 177,000 imported vehicles.
Construction of the new fully-integrated plant will begin this month, with production scheduled to start in 2018. Total spending earmarked for this project is reportedly CNY19.5bn (around US$3bn) for a plant with annual capacity of 300,000 vehicles per year.
The world’s second largest economy and the biggest car market by volume, China is expected to have 1 billion licensed drivers in the next 15 years. Taking advantage of this, Volkswagen Group has already announced it will incest €18.2 billion ($24.7 billion) in development and production facilities through 2018.
At full capacity it is expected to employ about 6,000 people. FAW-Volkswagen’s other plants are scattered in different locations in China, including Changchun, Foshan, Chengdu and Qingdao.