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Auto Industry

Volkswagen to build production facility in Thailand

German carmaker Volkswagen is expecting the go-ahead for a factory in Thailand, newspaper reports have claimed. The company aims to strengthen its position in markets with enormous growth prospects.

VW is only days away from getting permission to build a car factory in Thailand, Germany's daily Frankfurter Allgemeine Zeitung (FAZ) reported Monday.

It cited Thai investment authority officials as saying a corresponding application by the Wolfsburg-based multi-brand company could be decided on as soon as next week.

The newspaper added the production facility in question would be located near the port of Bangkok. Europe's largest automaker had applied for state subsidies for the project in spring of this year.

Rising to the challenge

The report claimed VW was aiming to make its investment within the local "Eco2 Program," which it said offered considerable tax breaks and reduced duty payments, if the company agreed to produce low-fuel vehicles with a consumption of little over four liters of petrol per 100 kilometer.

Road gets bumpy in China for German carmakers

According to the rules attached to that program, Volkswagen would also have to produce at least 100,000 units and start production no later than 2019.

With markets in Europe set to show little or no growth in the foreseeable future and China's expansion to slow down, Volkswagen has set its sight on the far more dynamic markets in South Asia, including Indonesia, Malaysia and the Philippines.

VW Chief Executive Martin Winterkorn has repeatedly said his company needs to beef up its presence in the region as a prerequisite for being able to overtake Japan's Toyota as the world's largest automaker in terms of the overall number of units sold annually.

hg/sgb (Reuters, FAZ)

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