Volkswagen to open two new plants in China

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

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.