VW to make Malaysia its regional hub

Volkswagen AG plans to make its plant in Pekan its regional hub and 800 new jobs are expected to be created within the next 2 years.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed, who met representatives from VW AG here on Monday, said the German car company expected to produce more than 30,000 (VW) vehicles at the plant by 2018.

“Pekan will become the regional automotive hub for VW,” he told Malaysian reporters during a visit to VW's assembly plant here.

Mustapa said DRB-HICOM's plant in Pekan was currently employing 2,300 people and was underutilized.

DRB-HICOM had signed a collaboration and licence agreement with VW worth RM1bil last year following a memorandum of understanding by both parties in August to study the feasibility of locally producing VW passenger cars in Malaysia.

Mustapa said plans were still on-track to manufacture the VW Passat and Jetta models by year-end. “Discussions are on-going to manufacture another model as well,” he said, adding that DRB-HICOM will begin exporting VW cars starting from 2013. “We expect to achieve up to 40 percent local content (for the VW cars) by 2014,” he said.

Mustapa added that Asean was one of the fastest growing markets in the world.

“VW sold 7,500 cars in Asean last year. Currently, they don't have a strong foothold in Asean,” he said, adding that DRB-HICOM's collaboration with VW was a step in the right direction. Mustapa, is currently leading a trade and investment mission in Europe until this Friday to promote trade and investment opportunities in Malaysia.

The delegation paid a visit to the VW's Wolfsburg manufacturing plant to promote bilateral ties. “We need to create a feel-good factor about their investments in Malaysia,” he said.

The Wolfsburg factory is the largest auto plant in the world. It sits on 1,500 acres of land and produces 3,500 vehicles a day. The company employs more than 60,000 people.