Volkswagen has announced that it will build a new engine plant in Silao, Mexico as part of its long-term expansion strategy in North America. The Silao plant will supply the latest generation of engines to VW’s vehicle plants in Chattanooga, USA and Puebla, Mexico beginning in 2013. The new plant has an annual capacity of 330,000 engines. Investment volume for the development of the new engine as well as for building the site totals US$550 million.

“This investment is yet another signal of the importance of North America to the Volkswagen Group,” said Jonathan Browning, President and CEO, Volkswagen Group of America. “The current expansion of capacity of the plant in Puebla, the upcoming start of production in Chattanooga, as well as the opening of the new engine plant in Silao, clearly shows Volkswagen’s commitment to winning in this market.”

Currently, the Volkswagen Jetta, Golf Estate and the New Beetle are produced in Puebla, Mexico. Production of the New Midsize Sedan (NMS) will begin in Chattanooga in 2011.

The VW Group is planning sales of one million vehicles in the US annually by 2018. The core element of this strategy is vehicles tailored to the demands of Americans, such as the Camry/Accord battling all-new Jetta and the D-segment NMS.