Work on Shanghai VW factory in Xinjiang to begin this year

A team of six German Volkswagen workers have recently finished inspection of the surrounding infrastructure of Shanghai VW's upcoming production site in Xinjiang's capital of Ürümqi, Xinhua reported today. According to staff from the Ürümqi Economic and Technological Development Zone, construction on the Shanghai VW factory, which has an expected annual production capacity of 50,000 vehicles, will begin within the year.

Li Ge, head of the Economic and Technological Development Zone's Investment and Promotion Center, confirmed that work on the Shanghai VW factory will begin this year, adding that the site should be operational by 2013.

Chinese manufacturers Shaanxi Automobile and Dongfeng Motor are also eyeing the Xinjiang region with new projects. The former is looking to build a production site boasting an annual production capability of 36,000 cargo and 20,000 special purpose vehicles, while the latter is aiming to build one with a capability of 10,000 automobiles and 10,000 special purpose vehicles. According to Mr. Li, the Shaanxi Automobile site should begin operation within the first half of the year. Several regional manufacturers also have plans for new sites in the region.

Increasing demand for automobiles in Central Asia is one of the key reasons Xinjiang has become such a popular destination for manufacturers in recent years. According to statistics from the Xinjiang Ministry of Commerce, the region exported 10,000 vehicles worth $343 million in 2011, growing over 70 percent from the previous year. Xinjiang borders Russia, Mongolia, Kazakhstan and several other countries, making it a perfect candidate for a Central Asian automobile production and export center.

According to Ministry of Public Security statistics, the number of automobiles on Xinjiang's roads is increasing 15 percent annually, with expectations that it will break the six million barrier by 2015. Automobile sales and related transactions in Xinjiang last year totaled 21.16 billion yuan ($3.36b), a year-on-year growth of 24 percent.