Volkswagen AG share price up, to reveal plans of Mexican plant expansion

According to a person with knowledge of the matter, Volkswagen AG is expected to announce next week a $1-billion expansion of its Mexican Puebla plant to build a new version of its Tiguan SUV for the US Market.

The investment is considered part of the German automakers strategy to revive its US business by offering a larger number of SUVs to its American customers.

In July 2014 the companys Chief Executive Officer Mr. Martin Winterkorn shared that Volkswagen has decided for the next Tiguan to not be manufactured in Germany and a December statement revealed that the SUVss new, longer version is planned to be built in Mexico, but required further negotiations.

According to three people with information on the matter, cited by the Wall Street Journal, negotiations have concluded and the next version will go in production next year, generating around 1 900 jobs.

VWs spokeswoman Consuelo Minutti refused to make any comments on the matter.

Currently, Mexico is the worlds seventh-biggest auto manufacturer and ranks fourth by automobile exports. The Puebla plant was opened in 1964 to begin production of the Beetle, and is currently VWs second-biggest facility after the main plant located in Wolfsburg. It is also the biggest auto factory on the territory of North America with an output of little over 475 000 cars last year, almost 15% of Mexicos total production of around 3.2 million vehicles.

Volkswagen AG rose 1.86% on Friday in Frankfurt to close at €229.85 per share, marking a one-year change of +23.41%. The company is valued at €108.51 billion. According to the Financial Times, the 31 analysts offering 12-month price targets for Volkswagen AG have a median target of €235.00, with a high estimate of €275.00 and a low estimate of €171.00. The median estimate represents a 2.2% increase from the last price of €229.85.