Volkswagen plans to spend around EUR500m on the extension of its Leipzig plant.

VW's production head Michael Macht told Automobilwoche that the factory has a good chance to have all stages of production added, Financial Times Deutschland said. Currently, it is only an assembly facility.

VW decided to invest in Leipzig because the capacity of its other factories is already fully utilised and the company expects demand to increase.

From 2013 the factory in eastern Germany will assemble Porsche's new Cajun small SUV.