FAW-VWFAW-Volkswagen, the joint venture between Volkswagen and China’s FAW Group, is to build a fifth vehicle plant in Tianjin.

Construction of the plant, named North China Base, will begin in May with production scheduled to start in 2018. The plant will have an annual capacity of 300,000 vehicles and will reportedly cost around 19.5 billion yuan ($3 billion).

The new plant will be built in the Tianjin Economic and Technological Development Area, just 45km from Tianjin port. Sun Guowang, secretary of the board at FAW-VW, said: “The location is near one of northern China’s main ports, which makes it convenient for logistics.”

Volkswagen already ships some vehicles out of Tianjin port but this is likely to increase with the new plant coming on stream. Short-sea shipping in China is already on the rise and likely to grow further as companies become more aware of sustainability and new laws come into force regarding the size of car carriers.

In August last year, a huge explosion rocked the port, killing more than 100 people and destroying around 10,000 vehicles, with around 2,700 Volkswagen vehicles completely destroyed.

FAW-VW’s four other bases in China are in Changchun, in the north east – the company’s main facility; Foshan, in the south; Chengdu, in the south west; and Qingdao, in the east. The FAW-VW joint venture produces Volkswagen and Audi vehicles for sale primarily in China and last year, output was around 1.65m vehicles. The company hopes to reach an annual output of 3m units by 2020.

Volkswagen also operates under another joint venture in China, Shanghai-Volkswagen, producing around 1.72m units in 2015. That company has plants in the south east in Yizheng, Nanjing, Shanghai and Changsha. The Changsha plant opened last year with a capacity of 300,000 Volkswagen and Skoda units a year.

Volkswagen's group sales in China and Hong Kong reached 3.55m vehicles ast year. That figure included 177,000 imported vehicles.