VW plans to build the Fox in India and southeast Asia

Wolfsburg, Germany. VW is creating "mobile manufacturing facilities" that can be built in a short time in emerging countries.

The German automaker also plans to develop low-cost small and medium-sized models that can be built in the mobile plants from complete knockdown (CKD) kits.

"We are ahead of our competitors with our production preparations for emerging markets," said a VW source.

The project is targeted at India and countries that belong to the Association of South East Asian Nations (ASEAN), which include Cambodia, Indonesia, Malaysia, the Philippines, Thailand and Vietnam. CKD production in these markets is of interest to Volkswagen because they levy high import duties for new vehicles. In India import taxes are 60 percent. In ASEAN countries import duties are between 15 and 40 percent.

The automaker is planning to establish CKD plants for Fox models in India and ASEAN countries during the next few years.

VW currently builds the Fox only at its plant in Sao Jose dos Pinhais, Brazil.

A van version of the model using CKD kits from Brazil will be built at Argentina's Pacheo plant from the end of 2005.