Volkswagen to Produce Cars in E. Germany

From Reuters

Volkswagen AG of West Germany, Europe's leading mass car maker, unveiled the biggest joint venture to date with East Germany today, a $3-billion pact to build Volkswagens at sites where East Germany's Trabant autos are now produced.

One result of the deal will be to consign the boxy little Trabant sedan, which became a symbol for East Germany's political upheaval last year, to history by 1993.

Thousands of the sputtering, two-stroke-engined cars brought refugees into West Germany in 1989. Once the borders opened in November, they carried in hordes of Eastern visitors eager to sample Western lifestyle for the first time.

Volkswagen AG Chairman Carl Hahn told reporters at the Leipzig Trade Fair today that a joint venture firm in East Germany will start assembling 50 VW Polo models a day from September with output set to reach 250,000 cars a year by 1994.

"We see this as a European car project, with Poland, Hungary and Czechoslovakia just around the corner," Hahn said, giving an indication of the potential target markets for the new car.

VW signed a commitment to the joint venture in December soon after revolution in Eastern Europe began breaking down the region's rigid barriers to the West.

The project, with a factory at Karl-Marx-Stadt, is by far the most ambitious yet announced by any Western firm in East Germany.

Adam Opel AG, the West German subsidiary of General Motors Corp., announced a venture Sunday which aims to make 150,000 cars a year in East Germany.

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