Audi announced earlier this year plans to build a factory in Mexico, a step designed to take advantage of low labour costs in Mexico and an exemption from import duties in some regions to help it reach its target of selling 1 million cars in the United States by 2018.

Audi said on Tuesday it picked the location based on good transport connections and its vicinity to universities and technical schools.

Audi said the new factory would have an annual production capacity of about 150,000 vehicles, as expected, and that the Q5 sport utility vehicles would be built there, starting in 2016.