Volkswagen beefs production in India, Mexico

FRANKFURT, July 7 (Reuters) - Volkswagen (VOWG_p.DE) is expanding production in Mexico and India as it continues to execute on an ambitious plan to surpass Toyota (7203.T) as the world's largest carmaker.

On Wednesday, VW's luxury brand Audi said it would begin building up to 1,500 units of the Q5 sports utility vehicles annually in its Aurangabad plant in India.

This would boost output volumes there to over 2,400 vehicles together with the A4 and A6 models already assembled at the site.

By 2015, Audi says it expects up to 6,000 units will roll off its factory lines in India each year. By comparison, the site has only churned out some 2,000 cars altogether since the start of production in Aurangabad in September 2007.

"The Indian market for automobiles will grow very rapidly, and the Q5 is the right automobile at the right time," said Audi production boss Frank Dreves in a statement, calling the decision part of the brand's long-term growth strategy for India.

Separately, Volkswagen's outgoing group head of production, Jochem Heizmann, opened a new part of the company's massive Puebla plant in Mexico on Tuesday and reaffirmed plans to build a powertrain plant in North America that could start producing engines starting in 2013. [ID:nN14281404]

Investments of $1 billion have been earmarked for Mexico through 2013.

"The choice of location has not been finalised yet, but a decision will be taken soon. Mexico is one possible option," Heizmann said.

Puebla, which will manufacture over half a million vehicles every year, will start building the next-generation Beetle in 2011.

The factory is VW's largest in the Americas and one of the largest worldwide. An engine plant in Mexico close to Puebla is therefore considered the most logical choice for a location in North America.

(Reporting by Christiaan Hetzner; editing by Simon Jessop)