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BEIJING — Volkswagen Group and its Chinese joint venture partner, SAIC Motor, plan to invest 4.13 billion yuan ($590 million) to revamp their car plants in Shanghai to make new Audi A7L sedans, according to a government document seen by Reuters.
SAIC Volkswagen, the joint venture of the German company and China’s biggest automaker, currently sells cars under the VW and Skoda brands.
With the revamp at its Shanghai plants, the JV is aiming for an annual manufacturing capacity of 60,000 Audi A7Ls and 60,000 new Volkswagen utility vehicles. The total capacity at the plants will remain unchanged.
The revamp, expected to be done by the end 2020, comes as demand for luxury cars in China remained firm even as sales in the world’s biggest auto market slumped over the past two years.
SAIC Chairman Chen Hong has previously said the JV plans to roll out the first Audi product in early 2022.
VW hopes to start production based on its MEB platform in Shanghai in the fourth quarter and has sought government approval for production of its ID4 electric crossover.
Audi China said its project with SAIC was proceeding according to plan, without giving any more details. SAIC did not immediately reply to a request for comment.
SAIC Volkswagen’s sales fell 37 percent from a year ago to 577,385 vehicles in the first half of 2020 as the coronavirus pandemic hit demand in China, while total industry sales fell 17 percent. The JV sold 2 million cars last year.
Audi also has a long-term collaboration with FAW Group in China to build all its cars in the northeastern city of Changchun and southern city of Foshan.