The Ningbo plant will be Shanghai Volkswagen's sixth plant and parent company Volkswagen's twelfth plant in China.

The plant, to be built in Ningbo's Hangzhou Bay district, will start production in late 2013, reported the Ningbo Evening News, a local daily newspaper. It will produce up to 300,000 vehicles a year.

According to the paper, the plant will cost 11.8 billion yuan ($1.9 billion).

The Ningbo plant offers more proof that China is the key to VW's ambition to be the world's largest automaker. Volkswagen trails GM in China -- if one includes GM's Wuling microvan joint venture -- and the two rivals are expanding aggressively.

Volkswagen currently has nine assembly plants operating in China. Five are owned by Shanghai Volkswagen, which is a 50-50 joint venture between Volkswagen and Shanghai Automotive Industry Corp.

Four other plants are owned by FAW Volkswagen Automobile Co., a joint venture between Volkswagen and China FAW Group Corp.

Two more facilities are under construction. FAW Volkswagen is building an assembly plant in Foshan in south China's Guangdong province, while Shanghai Volkswagen is constructing one in Yizheng in east China's Jiangsu province.

In the first ten months of this year, Volkswagen sold 1.9 million Volkswagen, Audi and Skoda vehicles in China, accounting for nearly 18 percent of the country's passenger vehicle sales.