German automaker Volkswagen's (VW) new plant in Changsha, capital of Central China's Hunan Province, rolled out its first model on Sunday, and the plant will add 300,000 units of production capacity to the automaker.

The plant, owned by Shanghai VW, a joint venture founded by VW and domestic automaker SAIC Motor, will produce its popular sedan model - the Lavida - initially, then produce the compact multi-purpose vehicle Touran and the Skoda A0 SUV in the future, the company said.

VW, along with many other foreign auto brands, is attempting to increase production in China. VW sold around 3.68 million units of cars in China in 2014, ranking No.1 among all automakers. The company plans to boost its annual production capacity in China to 5 million units by 2018.

The capacity boost comes at a time when the Chinese auto market is cooling and the sales of VW also saw a slowdown. In the January-April period, the sales growth of passenger cars slowed to 7.7 percent to 6.97 million units, 2.8 percentage points lower than the same period in 2014, according to data from the China Association of Automobile Manufacturers.

The unit sales of VW in April declined 1.3 percent to 853,200 units, the first year-on-year drop since December 2010, and weak performance in China was a major reason behind the drop, VW announced on May 15.

"Though the passenger car segment [in China] may no longer see double-digit growth, it will still grow much faster than any other area in the world," Jochem Heizmann, VW China CEO, told reporters on Sunday, predicting that the passenger car segment in China will still report growth between 5 to 8 percent in the next five years.

Zhang Yu, managing director at consultancy Automotive Foresight (Shanghai) Co, said that the slowdown in VW's sales in China is partly due to its limited offerings in SUV models, as the sedan segment has almost stopped growing while the SUV segment is growing by around 40 percent.

Heizmann told the Global Times on Sunday that the company will bring to China several new SUVs models in the near future, aiming to offer models that cover "different segments of SUVs."

Major foreign auto brands like VW and Ford have recently lowered their official prices in a bid to boost sales among the lackluster market.

"Smaller cities have become a major driving force for the auto market, but consumers there generally prefer more affordable homegrown brands, especially at a time when the overall economy is cooling," said Shi Jie, editor-in-chief at news portal auto.gasgoo.com.