Volkswagen Automatic Transmission in China has begun local production of dual clutch (DSG ) transmissions.

In a first phase, newly-founded Volkswagen Automatic Transmission in Dalian will produce 300,000 units of the seven-speed DSG transmission a year and capacity will gradually be expanded to a maximum of 600,000.

The company is spending EUR400m expanding component production capacity at Dalian. At the end of April, VW announced its two joint ventures in China were boosting their investment programme through 2012 by EUR1.6bn to EUR6bn in total, financed directly through the cash flow of the two JVs. The money will be used to expand production capacity and develop new vehicles in China through to 2012.

Dalian is the second plant worldwide to build DSG transmissions after Volkswagen Kassel, the lead plant for transmission production in Europe. VW makes six- and seven-speed versions and offers them worldwide across all of its brands with most of its petrol and diesel engines. DSG production in Dalian was set up with on-site support from Kassel experts who also trained some Chinese employees at their plant in Germany.

Volkswagen Group China president and CEO Winfried Vahland said: “The start of DSG production in China is another important step for Volkswagen Group China. We can progress towards our goal of further extending our market share while at the same time achieving a greater reduction in the fuel consumption and emissions of our vehicles by fostering progressive powertrain technologies.”

In 2007, Volkswagen Group China said it planned to achieve a 20% reduction in fuel consumption and emissions for its locally-produced vehicle fleet by 2010. Later that year , it launched efficient TSI engines in China in 2007 and gradually began domestic component production. The locally-produced DSG transmissions will be installed in vehicles for sale in China.

VW said there is “great demand” from Chinese customers for the dynamic, fuel-efficient and low-emission TSI engines and DSG transmissions.

“For Volkswagen, TSI and DSG are key technologies for becoming the most environmentally-friendly automaker in China,” Vahland added.

A few weeks ago, the group announced its e-mobility strategy for the China. Production of EVs there is scheduled to begin in 2013.

“The goal is to make Volkswagen Group China the market leader for forward-looking powertrain technologies,” the automaker said.