Volkswagen AG and its Chinese joint venture partner SAIC Motor plan to invest 4.13 billion yuan ($590 million) to revamp their car plants in Shanghai to make new Audi sedans, Reuters reported on Tuesday with sourcing from a government document.

SAIC Volkswagen, the joint venture of the Wolfsburg-based automaker and China's biggest automaker, currently only sells cars under the Volkswagen and Skoda marques.

According to Reuters, with the revamp at its Shanghai plants, the JV is aiming for an annual manufacturing capacity of 60,000 Audi A7L sedans and 60,000 new Volkswagen sport utility vehicles.

The revamp, expected to be done by the end of 2020, comes as demand for luxury cars in China remains firm. SAIC Chairman Chen Hong has previously said the JV plans to roll out the first Audi product in early 2022, Reuters said.

"Our Audi project is going normally," a source at the securities investment department of SAIC said on Tuesday, but gave no comment on VW's investment, according to the Cailian press. Audi China said its project with SAIC was proceeding according to plan, without giving any more details, Reuters reported.

SAIC Motor, an industry bellwether, sold 479,000 vehicles in June, a year-on-year increase of 2.8 percent according to the latest production and sales report released by SAIC Group on July 6.

Meanwhile, seven out of SAIC's 11 vehicle subsidiaries achieved year-on-year sales growth in the same month, showing strong momentum.

A number of other auto companies in China have also reported strong recoveries in June sales, with Geely Auto's June sales up about 21 percent year-on-year, Toyota China up 22.8 percent year-on-year, Nissan China up 4.5 percent year-on-year, and Dongfeng Motor up 9.8 percent year-on-year.

The Chinese auto market as a whole has returned to positive growth starting in April, with auto sales increasing 4.4 percent and 14.5 percent year-on-year respectively, according to the China Association of Automobile Manufacturers.