Volkswagen China may build a manufacturing facility in Guangzhou, its first south of the Yangtze river, as the country's largest foreign carmaker attempts to seize market share from its Japanese competitors in southern China.
The firm will build the new plant to make its compact Seat model, with an initial production capacity of 200,000 units, according to the 21st Century Business Herald. No details of the investment were disclosed.
Volkswagen China could not be reached for comment.
Soh Weiming, executive vice-president for sales and marketing at Volkswagen Group China, said in November that the carmaker planned to increase its market share in southern China to 20 per cent from 12 per cent in the next two years. The region has long been dominated by carmakers such as Toyota Motor Corp and Honda Motor.
The strengthening yen and a lack of new Japanese models are providing European carmakers with opportunities to take market share on the mainland from their Japanese rivals.
To expand in the south, Volkswagen is focusing on Hong Kong and Macau, where consumer habits often influence buyers in Guangzhou and nearby cities. The firm has a strong foothold in the north and east with its joint-venture partners First Auto Work Group, based in Jilin, and Shanghai-based SAIC Motor Corp.