Audi Chooses Mexico Plant Site Near VW Facility

Volkswagen AG's Audi brand plans to erect a new factory in San Jose Chiapa, Mexico, and begin making the next-generation Q5 crossover vehicle in 2016 for international markets.

Earlier news reports suggested Audi would spend about €1.5 billion ($1.9 billion) on the plant. San Jose Chiapa is about 125 miles from Mexico City and 40 miles from a VW factory that builds Beetle and Jetta small cars.

Audi confirms that the facility its first in North America will have annual capacity of 150,000 vehicles. The output will help the brand reach its target of selling 2 million vehicles worldwide by 2018, including 200,000 units in the U.S.

Audi has been mulling a North American plant for several years to reduce its exposure to the strong euro. The brand said in April it had selected Mexico because of the country's good infrastructure, competitive costs and free trade agreements with Europe, South America and the U.S.