Volkswagen has said it is to increase its investment in China by EUR1.6bn (US$2.1bn) with two new plants and other projects, as the company expands its business in the world's largest auto market.

Chief Executive Martin Winterkorn said: "Growth in China has exceeded all expectations."

The investment is in addition to the EUR4.4bn the carmaker committed last year to expand capacity and develop new products in China by 2012.

Winfried Vahland, head of VW’s Chinese operations, said the company will introduce new models and the latest technologies to China with the long term aim of achieving annual sales of 2m units in the country.

In the first quarter of this year VW delivered 457,259 vehicles in China and Hong Kong, up 60.9% year on year and accounting for 26% of the company's global sales of 1.73m.

VW sales in China rose 36.7% last year to 1.4m.

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