Ole' - Mexico VW Sees Production Up 30%

MEXICO CITY, Jan 6, 2003; Reuters reports that the Mexican unit of German auto giant Volkswagen (VW) (XETRA:VOWG.DE - News) said on Monday it expects to raise production by 30 percent in 2005, when it begins to manufacture a new model for export to Europe.

Volkswagen will begin making its new Bora model -- a medium-sized sedan -- in 2005 with an investment of $180 million and plans to produce around 100,000 vehicles annually at its plant in the central state of Puebla, the company said in a statement.

VW's Mexico unit is the only one worldwide to make the New Beetle, which is exported to 80 countries. The plant has seen production fall with a drop in demand from the United States, the biggest car market in the world.

From January to November last year, VW Mexico produced 318,709 cars. The company expects 2002 production to reach 340,000 cars compared with 380,690 produced in 2001.

With the new production line, VW Mexico plans to invest a total of $2 billion in 2003-2007 and create around 1,500 new jobs, the statement said.

VW Mexico at the end of last year began production of the New Beetle convertible. The company anticipates it will produce 60,000 of the cars in 2003.

That model now adds to the company's average daily production of 80 VW sedans, which are made exclusively in Mexico, as well as 880 Jettas and 360 New Beetles, which are mainly sold abroad.

Mexico is the 10th biggest carmaker in the world and has attracted major auto companies due to its numerous free trade pacts and cheap cost of labor.