Volkswagen's Mexican subsidiary shortly will complete work on a virtual reality research and development facility, according to a report in the financial daily El Economista.

The new R&D centre - which will be used to adapt vehicles to Mexican conditions - is part of Volkswagen's strategy to counter increasingly fierce local competition from car makers such as Ford and DaimlerChrysler, El Economista business columnist Marilena Vega reported.

Volkswagen has paid a low, 2.2 percent Mexican import tariff on European-made models since July last year, when a Mexico-EU free trade agreement went into effect. The tariff is the same as that paid by U.S. automakers with assembly plants located in Mexico, under the terms of the North American Free Trade Agreement (NAFTA), the newspaper said.

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