Ryan Beene
AUTOMOTIVE NEWS
Published: July 14, 2014 2:15 pm ET
Updated: July 14, 2014 2:21 pm ET
Image By: Volkswagen AG
Volkswagen AG will base its new American-focused crossover vehicle on this concept, and make it in Tennessee.
Volkswagen AG will assemble a new family-hauling crossover at its plant in Chattanooga, Tenn., and invest $900 million to expand the factory in a push to double U.S. sales of VW-brand vehicles by 2018.
Production is slated to begin in late 2016 at the Chattanooga plant, Volkswagen’s sole U.S. assembly site, where it builds the Passat mid-sized sedan. Volkswagen will invest $900 million in the project and add about 2,000 jobs at the plant, CEO Martin Winterkorn said July 14 in a press conference near the company’s headquarters here.
VW will also open a North American vehicle design and development center in Chattanooga to be staffed by about 200 engineers to better cater its vehicles to the North American market, Winterkorn said.
Winterkorn said the initiatives reflect VW’s long-term commitment to the North American market.
“We are now launching the second phase of the Volkswagen campaign in the U.S.,” he said in a statement. “With the midsize SUV, the expansion of the Chattanooga plant and the new development center, the focus is on the wishes of the U.S. customer.”
In prepared remarks, Winterkorn said, “Our big objective is clear: By 2018, the Volkswagen brand wants to sell about 800,000 vehicles per year in the U.S.”
Last year, VW tallied 407,704 U.S. sales, a 7 percent decline from 2012. This year’s sales are down 13 percent in a U.S. market that continues to expand.
The decision to expand in Chattanooga also shows that the U.S. South remains competitive in the eyes of overseas auto executives despite the ascendancy of Mexico, where luxury marques BMW, Mercedes-Benz and Audi have all announced plans to start production by 2020. | 
