Volkswagen is getting into the new car business, buying new car parts supplier Schaumburgh Honda in a deal worth about $12.8bn (£9.6bn) according to Reuters.
The deal will see the UK-based company expand its manufacturing capacity in Europe by 30% and increase its workforce by 100 people.
The German automaker plans to build the cars in its UK factories and the deal is believed to be worth more than $30bn.
The deal will help it boost its sales in the UK and is expected to create a 2.4 million-strong manufacturing workforce.
It is expected that the deal will not be completed before the end of the year and that the car maker will retain the Schausturg headquarters.
In total, Volkswagen plans to increase its manufacturing workforce by 80% by 2020, which will be the largest increase since the financial crisis of 2008.
Schausturgh has a history of delivering quality, affordable vehicles.
The company has been supplying parts to VW since 1996.
“This is a great news for Volkswagen, its global customers and the European automotive industry, as the deal with Schausterh Honda is the latest example of the global Volkswagen Group’s commitment to the automotive industry,” said Andrew Cole, Chief Executive Officer of Schaasturgh.
In addition to the car deal, Volkswagen also plans to boost the quality of its electric vehicle range and build its first electric-only vehicles.
According to Reuters, the deal includes a $9.4bn cash incentive for the new supplier and additional financing of about $7.2bn.
VW has already made a major investment in the new factory and has also announced a $1bn expansion of its existing factory.