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BERLIN, July 7 -- German auto giant Volkswagen announced Monday that it will build two new auto plants in its largest market of China to expand production capacity.

"China has become our largest and most important market. To satisfy the demands of our customers in the country, we are engaging in a further substantial expansion of our capacities in China together with our Chinese partner FAW Volkswagen," said Martin Winterkorn, Chairman of the Board of Management of Volkswagen, in a statement.

The two new plants would be built "step by step" in north Chinese cities of Qingdao in Shandong Province and Tianjin municipality, with an investment of 2 billion euros (2.72 billion U.S. dollars), according to the Wolfsburg-based carmaker.

Volkswagen said it had sold 20 million vehicles in China over the past 30 years and would invest a total of 18.2 billion euros (25.25 billion U.S. dollars) between 2014 and 2018 in new plants and products together with its Chinese joint venture partners.

During the first five months of 2014, Volkswagen delivered about 1.51 million vehicles in China, up by 17.7 percent year-on-year.