German car maker Volkswagen AG is considering setting up a new production base in Guangdong Province to boost sales and raise market share in south China, a Chinese newspaper reported yesterday.

Since VW entered the Chinese market in 1984, it has performed sluggishly in south China, where Japanese rivals, including Toyota, Nissan and Honda, are dominant.

More than 4 billion euros (US$5.5 billion) will be invested in the new facility, due to be completed in 2013, which will make models under Volkswagen, Audi and Skoda brands, The Beijing Times said, citing Winfried Vahland, president of Volkswagen China Group.

Two factories with output capacity of 200,000 units each will be set up by VW's domestic ventures, the report added.

Last year, VW announced plans to boost sales and raise market share in south China, including the Guangxi Zhuang Autonomous Region and provinces of Hainan, Zhejiang, Jiangxi and Fujian.

It wants to boost sales from 150,000 units now to 500,000 units in these areas within three to five years and to drive market share to 18 percent from the 12 percent in 2008. The measures were part of its overall strategy in China to double sales to 2 million units by 2018.

Analysts said the setting-up of the plants in south China would be necessary to meet the goal.An official of Volkswagen China surnamed Tian said she isn't aware of the matter.