Volkswagen AG, Europe's largest carmaker, on Tuesday said the company and its Chinese joint venture are investing 9.1 billion yuan (1.4 billion U.S. dollars) to build an assembly plant in eastern China which can produce about 300,000 auto units a year when it becomes fully operational.

Volkswagen AG and Shanghai Volkswagen Automotive Co., a joint venture between China's largest carmaker SAIC Group and Volkswagen AG, signed the investment agreement in Shanghai on Tuesday.

The new plant, located in Yizheng City of Jiangsu Province, is expected to start operation at the end of 2012. The plant will also create more than 3,000 job opportunities, the agreement said. The plant will be Shanghai Volkswagen's fifth assembly plant.