The VolkswagenSAIC Motor joint venture will spend CNY4.13bn (US$590m) to revamp its car plants in Shanghai to make Audi sedans, according to a government document seen by the Reuters news agency.

The report noted JV SAIC Volkswagen, China’s biggest automaker, currently only sells cars under the Volkswagen and Skoda brands.

According to the report, the Shanghai plant revamp would give the JV an annual manufacturing capacity of 60,000 Audi A7L sedans and 60,000 new VW SUVs. Total capacity at the plants would remain unchanged.

Reuters reported the revamp, expected to be done by the end of 2020, came as demand for luxury cars in China remained firm even as sales slumped over the past two years.

The report noted SAIC chairman Chen Hong had previously said the JV planned to roll out its first Audi model early in 2022.

For the Audi manufacturing process, the JV will use facilities built for the VW MEB platform which is the basis of various group EV models already in production or scheduled.

Volkswagen hopes to start Shanghai MEB platform based model production from the fourth quarter of 2020 and also has sought government approval for production of its electric ID.4 vehicles, Reuters said.

Audi China told the news agency its project with SAIC was proceeding according to plan, without providing any more detail. SAIC did not immediately reply to Reuters’ request for comment.

SAIC Volkswagen sales fell 37% year on year to 577,385 vehicles in the first half of 2020 as the coronavirus pandemic hit demand in China while total industry sales fell 17%. The JV sold 2m cars last year.

Audi also has a long-term collaboration with China’s FAW Group to build all its cars in the northeastern city of Changchun and southern city of Foshan, the Reuters report noted.