BUDAPEST -- A Hungarian environmental group has withdrawn an appeal against Audi's planned expansion of its car plant in the western Hungarian city of Gyor, the company said on Wednesday.
This removes a key hurdle in the way of the 900-million-euro ($1.29 billion) project, which would create 1,800 jobs.
Audi, Volkswagen AG's luxury brand, plans to produce 125,000 vehicles a year once the expanded plant in Gyor begins full production from 2013.
The automaker currently builds the A3 cabriolet, TT coupe and TT roadster at the plant and plans to produce the RS3 sportback and A3 sedan there too, giving a major boost to Hungary's export-driven economy.
"We were informed today that the plaintiff has withdrawn the appeal," Audi spokeswoman Monika Czechmeister told Reuters Wednesday.
"Now we are waiting for the construction permit, and when we have all the permits needed, we launch the investment," she said.
In January, the European Commission approved the extension of the plant on the grounds of paramount public interest.
In April an environmental group appealed against the land use permit issued for Audi, saying it was concerned for wildlife in the affected area, which also includes part of a nature reserve. It also said the ruling that approved the land use for the site contained procedural errors.
Audi did not explain why the group had withdrawn the appeal, and the group could not be reached for comment.
Opel, Daimler expand in Hungary
In April, the Hungarian government approved 11.2 billion forints ($62.88 million) of direct subsidies for Audi's expansion and another 5.5 billion forints for General Motors Co.'s Opel. Last year, the two carmakers announced expansion plans at their plants in the western Hungarian towns of Gyor and Szentgotthard worth a combined 1.4 billion euros.
Daimler AG's new 800-million-euro Mercedes plant in the central town of Kecskemet is also expected to start production in 2012.
Economy Minister Gyorgy Matolcsy said in April, that these three projects combined would add 2 percentage points to the contribution of the car sector to Hungarian GDP, lifting it to about 5 percent of economic output from 3.1 percent.
That will also boost the contribution of car exports from 16 percent to 18 percent of all Hungarian exports in the years ahead, he said.
Sources: Reuters and Bloomberg