Volkswagen has given the Microbus, designed in California and unveiled as a concept vehicle at the 2001 Detroit motor show, the go-ahead and will build the new minivan at its Hanover site.

The decision means 1,500 new jobs for the Hanover plant which will be created as part of the unique 5000 x 5000 labour model.

Under this new concept, Volkswagen AG will employ a total of 5,000 persons for a gross wage of DM 5,000 (€ 2,556). The decision to create 3,500 new jobs to produce a minivan at the Wolfsburg plant was already taken last year.

"Having reviewed the economic requirements for building the Microbus in the group, we have come to the conclusion that, based on the 5000 x 5000 project and a thorough restructuring of the Hanover site, the conditions are good," said chairman Bernd Pischetsrieder.

Reports from Germany say that the other candidate for the project was VW's factory in Palmela, Portugal, where it currently produces the Sharan people carrier.

According to the reports, VW management delayed the decision on where the vehicle would be produced due to the lack of visibility of the US vehicle market - the main market envisaged for the Microbus - and due to uncertainty about whether VW could sell 100,000 units.

Volkswagen says the Microbus, due out late in 2004 as a 2005 model, will create a new segment - "a MPV (minivan) combining striking design and high functionality with the comfort of a limousine".

Making the announcement, Pischetsrieder said that "with the Microbus, a legend begun some 50 years ago when the first VW bus left the production line here is now returning to Hanover.

"The VW bus was never just a means of transport, it has always been an emotive cult object. The public's reaction at motor shows combined with the findings of market studies already show us that the Microbus design has a spontaneous appeal, and that the vehicle will follow in the footsteps of its successful predecessor."