PARIS — Volkswagen AG will build its new Bugatti super luxury cars in the same French villa where founder Ettore Bugatti made his reputation and fortune between the world wars.

Volkswagen paid US$2.8 million for 5 ha (14 acres) of industrial site in Dorlisheim, France, and the former Bugatti family chateau. Bernard Higel, mayor of the commune where the Bugatti models will be built, says factory construction is to start next year.

The new Bugatti plant will be next to the original one, which now is occupied by a successor company, Messier-Bugatti, which makes carbon-fiber wheels for Airbus and Boeing.

“The first Bugatti model should be finished by the end of the year 2002,” VW Chairman Ferdinand Piech tells a German newspaper. “We'll attack Rolls-Royce with that.”

Volkswagen last year bought automotive rights to the Bugatti name from a company in Luxembourg, Bugatti International, which was one of a number of firms that failed to bring life to Bugatti after Ettore died following World War II.

The price of the brand was never revealed, but it was reported to have been more than US$25 million.

Volkswagen is expected to employ 200 workers at the factory, making 50 cars per year that will range in price from US$290,000 to US$575,000.

“Volkswagen has a very ambitious strategy in the super-luxury sector,” says auto analyst Andrew Blair-Smith, at Commerzbank in Frankfurt. “They might be over optimistic on the size of the market and their ability to access it.”