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VW set to take over Fiat plant in Nanjing

(China Daily)
Updated: 2008-04-10 09:49

A model poses beside Shanghai Volkswagen car at an exhibition in Nanjing, Jiangsu Province. Volkswagen AG will take over a former Fiat SpA plant in Nanjing.[China Daily]

Volkswagen AG, the largest overseas carmaker in China, will take over a former Fiat SpA plant in Nanjing because of surging sales in the world's second-largest vehicle market.

A ceremony will be held on April 18 to unveil the factory, Zhang Wenjing, a spokeswoman for Shanghai Volkswagen Co, said yesterday. Shanghai Volkswagen, a venture between the German automaker and SAIC Motor Corp, will make the Santana Vista model at the factory, Zhang said.

Volkswagen aims to sell 1 million cars in China this year, straining its capacity, Winfried Vahland, president of the company's China unit said in October. The ex-Fiat plant was taken over by SAIC after it agreed to buy all of Nanjing Auto's auto-making assets last year.

"The factory will be a big help to Volkswagen," Yale Zhang, a Shanghai-based CSM Asia director, said. "It will allow the company to add new models more quickly."

Nanjing Auto scrapped the Fiat venture last year to focus on selling its own-brand MG cars. The venture had an annual production capacity of 60,000 vehicles, China Business News reported on Tuesday, without citing anyone.

Volkswagen boosted China sales by a third in the first quarter after adding the Santana Vista. The company sold 103,200 vehicles in China last month, the first time it has sold more than 100,000 cars in a single month in the country.

China's car sales have expanded by more than half in the past three years in line with its surging economic growth. That has attracted foreign automakers to increase investments in the country.

Hyundai Motor Co, South Korea's largest carmaker, opened a $790 million factory in Beijing on Tuesday. The new plant will have an initial capacity of 200,000 vehicles a year.

Kia Motors Corp, an affiliate of Hyundai, opened its second factory in China in December. The factory, which can make 300,000 vehicles annually, boosted Kia's total capacity in China to 430,000 units.

China's passenger car sales rose 24 percent last month, the fastest pace in seven months, according to the China Association of Automobile Manufacturers.