MUNICH -- Audi will continue to build the Audi TT premium coupe and roadster models in Hungary after the next-generation models are introduced in late 2007.
The decision is good news for the 5,000 workers at Audi's plant in Gyor, which is in western Hungary, but a setback for Audi's factory in Neckarsulm, Germany. The German plant had hoped to win the contract to make up for the loss of the A2 entry premium model, which will be discontinued in 2006.
Audi started building A3 entry premium cars at Gyor in 2000 because its Ingolstadt plant was at full capacity. A3 production at Gyor was stopped last year when the first A3 generation was discontinued.
The German press speculated heavily that TT production would go to Neckarsulm after A2 production ends.
The innovative, all-aluminum A2, introduced in 2000, will be axed after failing to reach Audi's sales targets of 50,000 units a year.
Audi sold only 12,396 A2s in the first half of this year, compared with 15,716 during the same period last year.
An Audi source said there had been quality problems with TT production in Hungary but these have been resolved.
Audi started TT production in Gyor in 1998. It produced 32,337 TT models there last year. The plant also built about 1.3 million engines for Audi and other Volkswagen group models.