(Bloomberg) -- Volkswagen AG may expand production of a mid-sized sedan designed for U.S. customers to China in a bid to win buyers in the world's biggest auto market.
The model, which will be priced at about $20,000, will be built to begin with at VW's new plant in Chattanooga, Tennessee, and sold in the U.S. in the second half of 2011.
“We will see demand for this car growing in other countries such as China,” said Ulrich Hackenberg, head of Volkswagen's brand development. “Our production pattern allows us to transfer vehicles from one plant to another at relatively low effort.”
VW, aiming to surpass Toyota Motor Corp. in sales and profitability, is relying on China to meet a goal of increasing global deliveries to 10 million by 2018. It announced the addition of two Chinese factories this year to double production in VW's biggest market to 3 million cars within four years.
Europe's largest automaker plans to invest 6 billion euros ($8.3 billion) in China for the expansion and add new models. VW sales in China jumped 41 percent to 1.29 million vehicles through August.
China's auto market may grow 52 percent to annual sales of 19.2 million vehicles in the next eight years, Hackenberg said.
“China is VW's undisputed No. 1 priority,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler. “A third of VW group profits stem from China and its weight is likely to increase rather than decrease. China continues to be a goldmine that VW can't afford to let go.”
Seeking to return U.S. operations to profit no later than 2013, VW is targeting 67,000 U.S. sales of the new mid-sized sedan next year, Jonathan Browning, VW's new U.S. chief, said at a conference in Wolfsburg, Germany on Monday. Annual deliveries of the vehicle, whose name will be unveiled next year, may reach 150,000 from 2012, he said.
“The U.S. market offers great opportunities,” Browning, a former General Motors Co. executive, said during his first public appearance in Europe since taking over the new job at VW. “It's all part of our global expansion strategy.”