Local production considered key to increasing US sales
15 July 2008

Volkswagen has chosen Chattanooga, Tennessee as the site of its new $1 billion North American production plant.

The decision, which comes after a lengthy review of over 25 potential sites over the year, has been announced by Volkswagen chairman Martin Winterkorn.

The Tennessee site, settled upon during a management board meeting at Volkswagen’s Wolfsburg based headquarters in Germany yesterday, will go into operation in 2011, creating up to 2000 jobs.

“The US market is an important part of our volume strategy,” said Winterkorn in revealing the identity of the Tennessee site, adding, “Volkswagen will be extremely active there. Volkswagen has set out to quadruple its US sales with a brand building strategy aimed at netting it over 800,000 sales there by 2018 – up from 329,000 in 2007.

The first model to roll out of Volkswagen’s new US manufacturing plant will be a new low cost mid-sized sedan that is being developed specifically for the North American market. It is also likely that Volkswagen could re-establish US production of the Golf in a bid to bolster overall profitability and negate the negative effects of the strong European currency against the American dollar.

The initial stage of construction for the Chattanooga plant will provide annual capacity for up to 150,000 cars, including body production, paint shop and assembly operations. Together with the 2000 jobs to be created by Volkswagen, a further 2000 additional positions are expected to be created in associated supplier and logistic partners.

Winterkorn pointed to the strength of the single European currency as being one of the driving forces behind Volkswagen’s decision to set up shop in Tennessee. “This, along with our growth strategy, is a prerequisite for the economic successin the dollar region.”

Volkswagen hopes US car buyers will come to perceive its locally produced cars as being ‘domestic’ products, as they do for cars made in the ‘States by Toyota, Honda and Nissan.

Greg Kable

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