VW expects 30 percent drop in Mexican auto production this year

Volkswagen expects Mexico's automotive production to fall 30 percent due to the global recession, according to a comment from Otto Lindner, head of the company's Mexico operations, given at the inauguration of an expansion project at Volkswagen's massive automotive complex in the central city of Puebla.

Back in January, the firm predicted an output decline of 20 percent for this year.

Currently, VW’s Puebla, Mexico plant, its only manufacturing facility in North America, is operating at partial capacity. It is in Mexico where the firm manufactures the Jetta, Beetle and SportWagon, also known as the Golf Variant.

Mr. Otto also announced that the company will begin assembling a new compact car at its plant in Mexico early next year following a $1 billion investment. He added that of the total planned investment, $400 million will be spent on the creation of a new assembly line at the Puebla plant. "The rest of the investment will go toward the modernization of existing production lines and the development of the new vehicle," he said at the event, which had as a special guest, President Felipe Calderon.

Volkswagen is Mexico's number two automaker, selling most of its cars to the United States, Canada and Europe.