Despite a slowdown in sales this year, Volkswagen Group continues to expand car production in China after it opened a new assembly plant in Changsha.
The 1.2 billion yuan ($194 million) factory will be operated by Shanghai Volkswagen Automotive Co., a 50-50 joint venture between Volkswagen and SAIC Motor Corp.
The plant will build up to 300,000 VW brand and Skoda vehicles a year after reaching full capacity, according to Shanghai VW.
"The plant in Changsha is a key step in our Go South strategy in China. This new facility will bring us nearer to our Chinese customers and also improve the quality of our supply chain," VW China boss Jochem Heizmann said in a statement.
The VW Lavida compact sedan will be the first vehicle to be built in Changsha, about 900km west of Shanghai. Other VW and Skoda models will follow, the statement said.
The plant is creating more than 4,000 new jobs, together with 4,000 more in the neighboring supplier park.
Volkswagen is adding capacity despite an economic slowdown that has dampened sales in China. In the first four months of this year, Volkswagen's various brands delivered 1.19 million vehicles, up only 0.2 percent year on year.
The Changsha facility is Shanghai VW's fifth assembly plant. The joint venture also has production facilities in the east China cities of Shanghai, Nanjing, and Yizheng and the northwest China city of Urumqi.
Volkswagen also has a joint venture with China FAW Group Corp., which now operates three production sites. Two assembly plants are in the northeast China city of Changchun, one is in the southwest China city of Chengdu and one is in the south China city of Foshan.
FAW VW currently is constructing two new production facilities in the east China city of Qingdao and the north China city of Tianjin.
Shanghai VW produces Volkswagen and Skoda vehicles while FAW VW builds the Volkswagen and Audi models.