Volkswagen to produce new compact sedan in Mexico

Volkswagen Jetta

Following a $1 billion investment, Volkswagen will begin producing a new compact car at its plant in Mexico in early 2010. According to Otto Lindner, head of Volkswagen’s Mexican operations, the German automaker will spend $400 million of the $1 billion to create a new assembly line at the plant. The rest will go towards the modernization of existing production lines.

The model being built, known internally as the New Compact Sedan, will financially help Mexico, which has been thrown into its steepest recession due to a slide in U.S. demand. The plant also produces Jettas, Boras and New Beetles.

Production of Volkswagen’s new U.S. factory in Chattanooga, Tennessee, began in May. The $1 billion plant will begin making mid-sized sedans for the North American market in 2011. It will have an annual capacity of 150,000 units.

– By: Omar Rana

Source: Reuters