VW to invest in Puebla plant, expand US supplier contracts

Otto Lindner, CEO of Volkswagen Mexico, announced today that Volkswagen AG will expand production at the company's plant in Puebla, Mexico, partly in preparation for an as-yet unnamed new compact sedan for the global market.

In an interview with Automotive News last week, Otto Lindner said that production of the compact will start in 2010. "We can't say what it will be, but it will be a world car, with the exception of China," he said.

Currently, the plant produces both the current and previous generation Jetta sedan and wagon, as well as the coupe and convertible versions of the New Beetle. The United States and Canada are the primary exports markets for cars produced at Puebla. 40 percent of current- generation Jetta wagon production is exported to European markets.

Puebla to set all-time production record in 2008
In recent years, the Puebla plant has been operating at max capacity. The factory in set to build 450,000 cars this year and they will set a company record in the process.

Lindner said the expansion program will boost production output to 550,000 cars by 2011.

Volkswagen AG will build a new 65,000 square-foot stamping shop, a new 265,000 square-foot body shop and a new 85,000 square-foot logistics facility on the northern edge of the Puebla complex. The automaker also is extending the 117,000 square-foot paint shop by 70,000 square feet and adding 104,000 square feet to the 301,000 square-foot assembly shop.

VW to strengthen ties with US, Canadian suppliers
Along with the investment in Puebla plant, the automaker said it will also buy more parts assembled within Canada and the United States in an effort to combat fluctuating and often unfavorable exchange rates.

Currently, 60 percent of the parts used at Puebla are provided by suppliers based in Mexico. By 2011, the company plans for 90 percent of parts to come from suppliers within Mexico, Canada and and the United States, Lindner said.

[Source - AN ]