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VW to buy Karmann Ghia-maker's assets

Volkswagen says it will buy some assets of the maker of the iconic Karmann Ghia to create a new manufacturing subsidiary that will eventually build a new car model.
/ Source: The Associated Press

German carmaker Volkswagen AG said Friday it will buy some assets of German contract carbuilder Wilhelm Karmann GmbH to create a new manufacturing subsidiary that will eventually build a new car model.

Volkswagen said it will begin vehicle production at Karmann's main Osnabrueck, Germany site and headquarters in 2011, but did not specify what new car it would produce there. It didn't release any financial details.

In a short statement, VW, based in Wolfsburg, said its supervisory board approved the acquisition of land, machinery and equipment formerly belonging to the Karmann holding company at the Osnabrueck site.

VW said that according to its current plans, it could create 1,000 jobs at the site by 2014. It said it will require 200 people starting in 2010 to begin production and set up the vehicle project.

VW said Karmann has extensive experience in the production of small cars, which it could access as needed, but that it first has to hold final negotiations with Karmann shareholders on the deal.

Tracing roots back to 1874, Karmann long specialized in building bodies and components for cars and assembling them for other manufacturers. It's most famous car model was the Karmann Ghia, built for VW from 1955 to 1974.

In addition, it built models including Beetles and Golfs for VW, and has also worked with other manufacturers including Porsche, BMW, Renault, Chrysler and Ford.

In a separate report, VW said its automotive division will invest around $39 billion in the coming three years to upgrade its operations and and to modernize and expand its product range.