HERNDON, Va. (AP) _ Volkswagen is moving its North American headquarters from Michigan to Virginia next year and will cut 400 jobs, the German automaker said Thursday.

Volkswagen of America's move from Auburn Hills, Mich., to Herndon, Va., will begin in April 2008 and be completed by the end of next year, the company said.

It said that 600 of the current 1,400 staff will remain at Auburn Hills in call centre and technical services positions, while 400 jobs will be transferred to Virginia. About 150 employees in Michigan are expected to move to Herndon. The company's remaining posts will be cut, Volkswagen AG said.

The company said that the decision to move made sense given that it has most of its customers on the East and West coasts. The move involves affiliated operations such as Audi of America, Audi Financial Services and Volkswagen Credit.

``This move is part of our company's new corporate strategy of connecting even more closely with our customers, and encouraging fresh ideas and bold thinking,'' Volkswagen of America President and CEO Stefan Jacoby said in a statement.

Gov. Timothy M. Kaine authorized incentives worth $6 million to bring Volkswagen to northern Virginia. He said the state's skilled workers and proximity to Dulles International Airport were significant factors in luring the company.

Kaine said he was particularly pleased to add a major automotive company to Virginia's corporate roster following the loss of a Ford Motor Co. manufacturing plant in Norfolk, which closed earlier this year.

Volkswagen does not have an assembly plant in the United States but has expressed interest in building one. Kaine said he hoped that Volkswagen would pick Virginia if it chooses to expand.

Volkswagen CEO Martin Winterkorn said that ``the U.S. market has top priority for Volkswagen.''

In Lansing, Michigan Gov. Jennifer Granholm met with Jacoby on Wednesday evening after a report in The Detroit News that VW was considering the move. Neither commented after the meeting.

``The governor is always making the case for Michigan, and she will continue making the case for Michigan,'' Granholm spokeswoman Liz Boyd said earlier in the day.

Shares of Wolfsburg, Germany-based Volkswagen were barely changed Thursday, edging down less than 0.1 per cent to 150.22 euros ($204.52) in Frankfurt trading.

Volkswagen AG is the world's fourth largest producer of passenger cars and is Europe's largest automaker.