Volkswagen to build NW China assembly plant

Shanghai Volkswagen, German carmaker Volkswagen AG's joint venture in China, plans to set up an assembly plant in Xinjiang Uygur autonomous region this year to explore the markets of northwest China and Central Asia, local commerce officials said Thursday.

The plant, located in the regional capital Urumqi, is expected to become operational in 2013 and produce 50,000 units of small sedans annually, said Li Yi, an official with the trade and investment bureau of Urumqi's Development Zone.

Martin Winterkorn, chairman of the Volkswagen Group, was in Urumqi last week to inspect preparations for the new plant. Zhang Chunxian, Xinjiang's top official, told Winterkorn that Xinjiang's auto market is growing rapidly thanks to the improved transport network in the region as well as the network connecting it to neighboring provinces and Central Asian countries.

He said the Urumqi plant will help Volkswagen "gain a strategic advantage" in the northwest China and Central Asia markets.

Dongfeng Motor Corporation, a major Chinese carmaker, and Shaanxi Automobile Group Co Ltd, known for its heavy trucks, are also building assembly plants in Urumqi. The combined output of their Urumqi plants, which will focus on trucks and commercial vehicles, will be about 76,000 units a year, Li said.

Xinjiang covers sprawling 1.66 million square km of land and borders eight countries, including Russia, Kazakhstan and Pakistan.

Since 2010, China has been pushing for greater opening-up of the resource-rich and strategically-located Xinjiang, aiming to transform it into a regional economic hub from a relatively underdeveloped desert region.

China-made automobiles exported to Central Asian nations from Xinjiang more than doubled last year to 16,000 units, according to local customs data.

The revenue of these auto exports also grew by 120 percent to $680 million, according to figures released by the Xinjiang customs office. Over 80 percent of auto products exported to the Central Asia market were heavy trucks.

Xinjiang's customs attributed the sharp rise in auto exports to economic recovery in Kazakhstan and Kyrgyzstan and the appeal of low-cost but high-quality China-made automobiles.