Volkswagen said Friday it will build its best-selling Golf hatchback in Mexico, starting next year, as part of its efforts to build sales and production in North America, the weakest market for Europe's biggest car maker.
VW will build the Golf at its factory in Puebla beginning in the first quarter of 2014. The Golf vehicles will be sold in North and South America, and the production will be in addition to output of the model at VW's home base in Wolfsburg and in Zwickau in eastern Germany.
Volkswagen said the new Golf-producing plant is part of $5 billion the auto maker plans to spend in the United States and Mexico in the next three years to boost its vehicle production. VW also makes its Beetle and Passat engines in Mexico and is building a plant to make Audi cars in Mexico. VW also is studying whether to build a new SUV model in either Mexico or Chattanooga, where VW built a $1 billion plant to make Passat cars.
"The Puebla, Mexico plant offers an excellent economic basis for Volks-wagen production operations and is a well-established automotive manufacturing facility with a record of efficiency and high quality," said Hubert Waltl, a member of the board of management of the Volkswagen Passenger Cars Brand with responsibility for production. "With its existing infrastructure, competitive cost structures and free trade agreements, Mexico is the ideal location to produce the Golf for the American market."
VW said it is working to build more than 75 percent of the cars it sells in North America in the U.S. or Mexico.
"Volkswagen has ambitious growth plans, and localizing production is crucial for these plans to work out," Daniel Schwarz, a Commerzbank AG analyst in Frankfurt, told Bloomberg News. "You can't be successful in the mass-market segment if you only import cars."