Volkswagen has announced its plans to invest $1bn to expand and modernize its Puebla plant in Mexico.
The German automaker is planning to manufacture Tiguan compact crossover SUV in the Mexican plant, which currently produces Golf on the Modular Transverse Matrix (MQB) platform.
Volkswagen will construct a new body shop, which will have a high level of automation with advanced programming and control systems.
The new building is likely to add 90,000m2 to Volkswagen's existing Puebla facilities.
Volkswagen expects the project to add around $1bn annually to its parts purchasing volume in Mexico, and will create 2000 jobs in the region.
The Mexican plant will be producing 500 units of Tiguan per day, and the model will be supplied to North and South America, European Union and China.
Volkswagen Group of America CEO Michael Horn said: "Localization has become key to safeguarding our competitive position on the global market and manufacturing the Tiguan in Mexico will bring production closer to the US market.
"With production of the Golf A7 and the Tiguan now moved to Puebla, we will build approximately 90 percent of our products in the NAFTA region."
Image: Volkswagen de México. Photo: Courtesy of Volkswagen of America.
