Germany-based auto giant Volkswagen will open a new plant to produce DL382 transmission, a kit for Audi cars, in north China's Tianjin municipality in 2016.

Volkswagen Automatic Transmission (Tianjin) Co. Ltd. said Tuesday that the project, which involves investment of 576.6 million euros (643.4 million U.S. dollars), has had its civil engineering works completed and installed.

The first phase is slated for operation in May 2016, with an annual production capacity of 240,000 units, which will eventually increase to 480,000, the company said.

Set up in 2012, Volkswagen Tianjin unveiled its production line for DQ380 direct-shift gearboxes (DSG) in November 2014, which can produce 450,000 of the advanced gearboxes. Production capacity is expected to hit 1.2 million by 2016.

China is Volkswagen's largest market worldwide. Volkswagen Group China delivered 3.68 million automobiles to the market in the Chinese mainland and Hong Kong in 2014, up 12.4 percent year on year.