FAW Volkswagen has agreed to locate its 8 billion yuan (US$1.17 billion) new plant in Foshan in Guangdong Province as part of the German auto maker's drive to widen its weak footprint in south China, the Economic Observer reported yesterday.

According to an industrial outline issued by Guangdong Province, the joint venture between FAW Group Corp and Volkswagen will build a plant capable of producing 300,000 units in Nanhai District of Foshan. Construction will start next year and be completed by 2013, the newspaper added.

A spokesman for FAW Volkswagen was not available for comment yesterday.

At the end of April, Volkswagen AG announced it would invest another 1.6 billion euros (US$2.1 billion) in China to build two new plants and launch new models to meet rising demand.

The southern region of the country, which has a faster economic growth rate and stronger consumer purchasing power, has been dominated by Japanese car makers, including Toyota Motor Corp, Honda Motor Corp and Nissan.

Analysts said the new plant in south China will enable the joint venture to shorten the delivery period and build a stronger sales network in a bid to grab a bigger slice of the market.

Volkswagen plans to boost sales from 150,000 units to 500,000 units in south China within three to five years to raise its market share to about 19 percent from 12 percent in 2008.

Shanghai Volkswagen has also been reported to locate its new plant in Zengcheng in Guangzhou but a company official said no decision has been made yet.