Volkswagen to build two new factories in China

German automaker Volkswagen will build two new manufacturing plants in China, and each of the plants will have the annual capacity to produce 300,000 vehicles per year.

The company announced it has received approval to build the plants in Foshan and Yizheng. Approval was given during German-Chinese government consultations in Berlin and Volkswagen chairman and CEO Martin Winterkorn formalized the agreement signing papers with the presidents of two Chinese organizations that will partner with the company to build and produce cars at the plants.

Volkswagen will work with Shanghai Volkswagen at the Yizheng plant in eastern China and with the FAW-Volkswagen venture in Foshan, in southern China.

China is already the world's larget sales market for automobiles and further substantial growth is expected in the future, Winterkorn said. The Volkswagen Group intends to play a major role in shaping this growth with new environmentally compatible models and the expansion of local production capacity. Our news plants show that Volkswagen remains a strong motor for the Chinese industry.

Karl-Thomas Neumann, president and chief officer of Volkswagen Group China said the new factories are a key element in our plans to increase annual production capacity in China to 3 million vehicles in the medium term together with local partners.

The news is yet another piece of ambitious activity for Volkswagen, aiming to become the largest automobile manufacturer in the world. The company is readying its first-ever U.S. manufacturing plant in Chattanooga, Tennessee. Volkswagen was the last holdout of the major global automakers to build vehicles on U.S. soil though it did so briefly in the 1970s at a small factory but it wasted no time becoming aggressive once the decision was made. The plant officially began producing cars at the facility in May and the $1 billion plant is expected to reach full production early next year, making 150,000 vehicles in Chattanooga.

The Volkswagen group has finally arrived as a local manufacturer in the United States, said Winterkorn.

The company had previously announced its goal of becoming the world's largest automaker in terms of sales and profit by 2018. Part of that plan was boosting sales in the United States over the course of a decade to 800,000 units per year - thus, the Chattanooga plant became an important part of that growth process, as are product developments like the TAP system.

Volkswagen also made news recently when word of its driverless car reached the media. The company is developed a car that can drive itself at speeds of up to 80 miles per hour, bundling traditional navigation services such as cruise control and other automations with a series of road monitors. The company is developing the driverless system as production ready, meaning it could reach consumers within several years.