Construction of Volkswagen assembly plant starts in May

Recently, the news about the construction of the Volkswagen plant in Pakistan emerged on social media, stirring excitement among the public. After much anticipation, PakWheels confirmed the news is true.

Citing sources, the outlet revealed that the construction for a Volkswagen plant will commence in Pakistan on 10th May in Hub, Balochistan.

“The plant will be constructed in approximately 2 years,” it reported.

As per reports, Ittefaq Building Solution Ltd has been awarded the construction contract. According to an official from the company, the project, spanning over 900,000 square feet, will require an estimated investment of 4-5 billion rupees to complete.

The Volkswagen assembly plant will have the capacity to produce 28,000 vehicles per annum. This will mark a new milestone for the auto-brand in the Pakistani market.

However, this development was long impending; since 2018 to be exact. Back in 2018, Volkswagen AG and Premier Motors Ltd signed the final legal agreement to manufacture commercial vehicles in Hanover, Germany.

The company was actually scheduled to set up a shop in 2021. However, the global COVID-19 pandemic delayed the establishment of the production plant by 8 months.

Under the agreement between Volkswagen AG and Premier Motors Ltd, the company will invest $135 million in a bid to make new cars and set up an assembly unit in Pakistan.

The German auto-brand will reportedly manufacture its Amarok Truck and Transporter Van in Pakistan. Amarok Truck will compete against the Toyota Hilux and Isuzu D-Max in the country. Meanwhile, Transporter will be pegged against Hyundai Grand Starex and KIA Grand Carnival in the local market.

It is pertinent to mention that Premier Motors has already been selling Audi cars in Pakistan for over 10 years.

Back on 22nd June 2017, Volkswagen AG and Premier Motors Ltd signed a Letter of Intent. At the time, the Board Member of Management of Volkswagen, Dr. Joseph Baumert met with then Prime Minister Nawaz Sharif. Nawaz had assured Baumert that the government would facilitate the company in its venture in Pakistan.

However, it’s the Automotive Development Policy (ADP) 2016-21 that helped to create a fair degree of competition in the local market. Thus allowing foreign auto-investors to head to Pakistan.