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VW Finalizes Deal to Build Fifth Chinese Car Plant
Volkswagen AG has signed an agreement to erect a €170 million assembly plant in Urumqi in China's northwestern Xinjiang province with joint venture partner Shanghai Automotive Industry Corp.
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Volkswagen AG has signed an agreement to erect a €170 million assembly plant in Urumqi in China's northwestern Xinjiang province with joint venture partner Shanghai Automotive Industry Corp.
The partners expect to open the plant in 2015 with capacity to produce 50,000 vehicles per year. The investment is part of VW's plan to invest €14 billion by 2016 on new vehicles and plants in China.
VW has said it wants to increase its manufacturing presence in China's interior, where the company expects future sales growth. Xinjiang has experienced ethnic violence between Muslim minority Uighurs and Han Chinese residents in recent years. Analysts suggest the potential for disruptions to plant operations may be the reason for the venture's relatively modest plans for investment and output there.
VW says it also signed a letter of intent with its other Chinese partner, FAW Group Corp., to extend their joint venture by 25 years. The agreement was due to expire in June 2016.
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