Astco, a metals pressing subsidiary that makes steering column assemblies and airbag brackets, will start supplying components for new VW models next year.
Rover is Benson's largest customer at present and it expects the VW deal to be worth about pounds 1m a year.
The announcement was made as the group said pre-tax profits were pounds 233,000 for the year ended 31 May, compared with last year's pounds 1.92m. Sales increased to pounds 28m from pounds 25.7m last year.
The results were hit by exceptional costs of pounds 2m relating to acquisitions and disposals.
Richard Phillips, the chairman who has been restructuring the group since he took over in 1990, said profits before exceptional items were up by 16 per cent to pounds 2.23m and he was confident of further growth.
Since the year-end, Benson has agreed to manufacture heaters for the heating and ventilating group Andrew Sykes. Production will be moved from Wolverhampton to Benson's plant in Knighton, Wales. The deal is expected to be worth additional sales of pounds 2m.
Adjusted earnings per share were 0.18p. The final dividend was lifted to 0.33p per share (0.3p).Reuse content