Most of Volkswagen $7 bln N. America investment Mexico bound -CEO

PUEBLA, Mexico Tue Jan 14, 2014 3:30pm EST

PUEBLA, Mexico Jan 14 (Reuters) - Most of the $7 billion that German carmaker Volkswagen AG will invest in North America over five years will go to Mexico, the company's chief executive said on Tuesday.

"Most of it will be invested in Mexico for a new plant for Audi, investment for our new products... and some of it will go to the United States," CEO Martin Winterkorn said in the central Mexican city of Puebla, where the company has a major plant.

Last year, executives laid the foundation stone in Mexico for an Audi assembly plant, the premium brand of Volkswagen, Europe's biggest automaker. Volkswagen announced the $7 billion figure in Detroit on the eve of the North American International Auto Show.

With numerous free trade agreements, a cheap, well-educated labor force and proximity to the lucrative U.S. auto market, automakers have been lining up in recent years to set up shop in Mexico.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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