Volkswagen is to build a new car plant in southern China, doubling production capacity to 3m vehicles within the next four years.

The new factory in Foshan, near Guangzhou in Guangdong province, will have the capacity to assemble 300,000 vehicles annually and will begin operations in mid-2013. It will bring VW’s total investment in China to EUR6bn (US$7.2bn).

A complete production facility with press shop, body shop, paint shop and assembly unit is to be constructed on a 170 hectare site. Construction starts at the end of 2010 and the new plant will have a workforce of about 4,000 employees by 2013. The investment of about EUR520m will be funded from the cash flow of FAW-Volkswagen, the automaker said.

The FAW-Volkswagen and Shanghai Volkswagen JVs have nine plants in China producing about 20 VW, Škoda and Audi models. Foshan will be the sixth FAW-VW facility in China and the first in the south.

Although sales growth of new vehicles has slowed, China’s passenger car deliveries last month still gained 26% from a year earlier to 1.04m units, according to the China Association of Automobile Manufacturers. Year to date sales were ahead 55% at 5.68m units.

VW chief executive officer Martin Winterkorn said in a statement that China had become the group’s largest and most important market and it intended to continue “above average growth”.

VW, the largest overseas carmaker in China, said sales in the country to the end of May rose 48% to a record 778,000 vehicles.