Volkswagen announces plans to make cars in Malaysia

The two parties signed an agreement which will see DRB Hicom assemble Volkswagen Group vehicles in Malaysia, as part of the Strategy 2018 growth program. Volkswagen aims to increase its presence in South East Asia following a failed planned alliance with Malaysia's national carmaker Proton earlier this year. The tie-up is Volkswagen's second foray in assembling cars in ASEAN, after setting up a production plant to build Touran MPVs in Indonesia in 2009.

The deal, worth one billion ringgit, will start with DRB Hicom assembling Volkswagen Passat saloons starting from the end of 2011, with an initial annual capacity of "several thousand vehicles." The Wolfsburg-based carmaker adds that it plans to build further models for the Malaysian market on the basis of a local full scale production in a second expansion phase from the end of 2012.

"Developing the market potential of the ASEAN region is of major significance for the Volkswagen Group's long-term growth strategy," said Christian Klingler, Member of the Board of Management of Volkswagen AG. "We will be using existing structures and capacities at the DRB Hicom plant in Pekan to systematically extend our presence in the Malaysian market of the future."