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Volkswagen subsidiary Audi will build its first North American production plant in San Jose Chiapa, Mexico, officials said Tuesday.

The plant site, in the state of Puebla in Central Mexico and not far away from VW's existing production plant, was announced Tuesday by the Audi Board of Management and group management at parent VW.

Audi will build the successor to its current Q5 sport utility vehicle at its Mexican plant, with a planned annual output of 150,000 units. Production is scheduled to begin in 2016, according to Audi.

Chattanooga officials previously pitched a site next to the VW plant for the Audi facility.