Volkswagen Group says it plans to invest a total of €4bn in new products and expand production capacities in China. Output at both the Nanjing and Chengdu plants is to be boosted to 300,000-350,000 units by 2012.

"Demand for our models is growing so dramatically that our capacities in China are no longer sufficient," said Professor Dr Martin Winterkorn, VW Group CEO and Chairman.

The new investment will involve creating new body, paint and assembly plants at Nanjing and Chengdu, and three new models will be assembled at Nanjing from 2012, with two at Chengdu.

Volkswagen’s Nanjing facility is the result of a 2008 acquisition of the former Fiat and Nanjing Auto plant.