The automaker will invest 1 billion euros ($1.2 billion) into the factory, which will build a mass-market electric car based on a VW Group architecture.

The SMMT industry association downgraded its forecast for full-year sales by 100,000 units because of the latest lockdown measures to reduce fast-rising coronavirus infections.

Registrations in Germany declined amid COVID-19 and economic worries.

Tesla, which is building its first European plant near Berlin, said the fine is primarily related to administrative requirements.

The ZDK dealers association said the government's COVID-19 access restrictions do not pose a problem for the car trade.

VW's compact hatchback regained its place as Europe's best-selling car in July after it lost the crown in the previous two months to the Renault Clio.

Ford, Fiat Chrysler and VW were the big winners as the country's vehicle sales surged 388 percent, fueled by cheap loans. Automakers may not be able to build enough cars to meet demand, an analyst warned.

Volvo's Polestar brand is touting driving dynamics and connectivity as two ways that its first full-electric car can win converts from fans of Tesla.

Hyundai's new i10 minicar will arrive just as brands such as Ford and Opel are pulling their smallest models from the European market because profit margins are poor.

Nissan, Ford and Volkswagen were among automakers hit as European new-car sales fell 0.5 percent in April, amid weak demand in the UK caused by Brexit turmoil.

Ford confirmed it will end production of its C-Max minivan at its factory in Saarlouis, Germany, but said the plant will stay open with further investment in the Focus compact car that is built there.

BMW released pictures of its i4 full-electric car undergoing extreme cold weather tests in northern Sweden. The i4 will go on sale in 2021 as a rival to the Tesla Model 3.

Audi expects its new Q3 SUV to appeal to women buyers despite its more "masculine" design compared with the soft look of its predecessor.