Europe's biggest automaker Volkswagen AG said it is investing 4 billion euros over the next two to three years to maintain its "persistent development" in the world's fastest growing market.

The German automaker said it would use the fresh investments, coming primarily from its two Chinese joint ventures, for launching new products and local capacity expansion.

"China is one of Volkswagen's most important markets and we are the market leaders there," said CEO Martin Winterkorn. "Demand for our products is growing so fast that our capacity is no longer sufficient."