in China's Hunan province, as part of plans to expand its production capacity in the country to four million vehicles annually.
The proposed factory would have the capacity to build 300,000 vehicles a year and would start production in 2016, a spokesman for the German auto maker said.
China is the largest market for Volkswagen, which has plans to increase annual production capacity in China to four million cars from the current 2.6 million by 2018. Around one in five new vehicles sold in China carry VW brands.
In the first quarter of 2013, Volkswagen's China sales reached 768,565 cars, up 21.3% from the same period a year earlier. The company expects to sell 3 million vehicles in China this year.
Last month, Jochem Heizmann, head of Volkswagen in China and a member of the company's global management board, said that Volkswagen was in negotiations with Changsha authorities as part of the company's plan to build seven new plants in the country. The group currently has 12 vehicle production and component sites in the country, according to the company's 2012 annual report.
A Volkswagen spokesman said on Monday the new facility would be built with joint venture partner SAIC Motor Corp. 600104.SH -1.95% but declined to provide details on what models would be produced at the plant.
In March, the powerful state-run China Central Television criticized the auto maker, saying it failed to properly address consumer concerns about faulty direct-shift transmissions in VW brand cars.
A short time later, VW disclosed it would recall more than 380,000 vehicles at a cost, analysts estimate, of as much as $618 million.
In the course of expanding production capacities at its two Chinese joint ventures, Volkswagen expects to invest about €9.8 billion ($12.8 billion) by 2015.
It also plans to grow the number of employees in China to 100,000 by 2018, up from the 75,000 currently, the company said in April.
Globally, the auto maker employs around 552,400 people at the end of March this year.
No details were available on the number of jobs to be created by the new Changsha plant. When Volkswagen opened a comparable facility in Yizheng, around 300 kilometers northwest of Shanghai last July, Mr. Heizmann said about 3,700 jobs would be created.
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