The European Investment Bank (EIB) provides a EUR 70 million loan for the extension of production facilities and upgrading of the existing plant for the manufacturing of passenger cars and engines in Puebla, Mexico.

The loan will support the Volkswagen Group's strategy to maintain Mexico as the third largest production center of the Group and strengthening its position in the North America Free Trade Association market. In 2003, about 66% of the Mexican Volkswagen production was exported to the USA/Canada, 12% to Europe and 1% to South America and the rest of the world. 20% of the production was dedicated to the local market.

This project consists of the installation of new production facilities in the body shop and final assembly lines for the VW Jetta A5 vehicles, which will fill the capacity used by the old Volkswagen Beetle. Furthermore, the investment in a new engine production line, the new R5 Super Ultra Low Vehicle Emission engine, will enable the VW Group to meet standards for lower emissions in North America.

The EIB loan will help secure employment at the Puebla plant, located 120 km eastwards from the country's capital Mexico City, as well as a substantial number of indirect, local jobs, as an appreciable percentage of components value is originating in Mexico.

This loan is provided in the context of the EU co-operation policy with developing countries. In Asia and Latin America (ALA), EIB lending activity started in 1993. Under its current mandate, the EIB may lend up to EUR 2.48 billion during 2000 - 2006 to support capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investments that result in environmental improvements or foster regional integration. So far, the EIB has supported four projects in Mexico, for a total amount of EUR 140 million and a total of some 43 loans amounting to approx. EUR 2 billion have been provided for projects in Latin America.