German daily Frankfurter Allgemeine Zeitung reported that Shanghai Volkswagen plans to build a new car-making plant in Urumqi, capital of Xinjiang autonomous region in the far northwest of China. Initial investment was put at €230m.

Although being similar in size to Western Europe, Xinjiang has a population of just 22m and is one of the poorest regions in China. Urumqi is also located some 2,500km from the coast. However, the region may have potential as a car export base, as it has borders with Mongolia, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Pakistan and Afghanistan.

Volkswagen currently has nine factories in China, with an annual total production capacity of 1.9m cars.