The German automaker Volkswagen will build a new plant in Xinjiang, a province in China's undeveloped far west, a company official said on Sunday.
"We believe that there's big potential in the west of China," marketing and distribution chief Christian Klingler said in Beijing on the eve of a major auto show in the Chinese capital.
"The new plant is only part of our 'go west' strategy."
VW already has several production sites in China, all located in the east, with the exception of one in Chengdu, a city in the western province of Sichuan.
The group last year sold 2.3 million vehicles in China and plans to invest 14 billion euros in the country between 2012 and 2016.
VW sold more than two million vehicles worldwide in the first quarter of the current year, thanks to strong demand in China, North America and Russia.
The group's car brands cover VW, Audi, Skoda and SEAT and its commercial vehicles division includes MAN and Scania.