VOLKSWAGEN AG's new factory in China is designed to begin production by the end of 2015 under a strategy to lift capacity to 4 million units annually in the world's largest auto market by 2018.

The new plant, located in Changsha, Hunan Province, will have an annual capacity of 300,000 units. The German automaker yesterday broke ground for the facility which will be built by Shanghai Volkswagen, its joint venture with Chinese partner SAIC. The first-stage investment is estimated at 12 billion yuan (US$1.95 billion).

Volkswagen's production capacity is 2.6 million vehicles in China, where it aims to sell 3 million cars this year.

Volksagen has another six plants being built in China, and may invest 9.8 billion euros (US$12.8 billion) by 2015.