A proposed free-trade deal between the USA and the European Union would be hugely beneficial to the USA’s car industry, believes Volkswagen of America president and CEO Jonathan Browning.
Discussions over a Transatlantic Trade and Investment Partnership (TTIP) between the US and EU have been going on throughout this year and Browning is hoping an agreement will soon be reached.
A trade agreement could lead to lower import and export taxes and closer alignment of safety and emissions regulations, as well as encouraging more manufacturing investment in the USA.
At present, an estimated 85-90 per cent of Volkswagen of America’s production at its modern Chattanooga, Tennessee plant is destined for the domestic market.
“We would be very happy if the US puts in place some trade agreements that allow freer movement of vehicles between the US and other markets around the world,” said Browning. “For example, Mexico has a variety of both bilateral and multi-lateral trade agreements that make it a great production base into Europe and South America, and the US is missing an opportunity by not having those agreements in place.
“It doesn’t provide an incentive to invest in manufacturing capacity in the US. When some of those trade agreements are finalised, assuming they are, that allows people to think about investing in manufacturing capacity for the US, not just for the domestic market but also for other markets. At the moment, when you look at manufacturing investment in the US it has to essentially make its case on the US volume.”
Volkswagen of America’s Chattanooga factory, where the US Passat is made, was built to a modular design to give it the potential to grow in size. Its potential capacity of 150,000 cars per year could expand to as much as 592,000 according to demand.
“We still can expand throughput in the existing facility and then there’s another step where we could literally build a mirror image of the current building on the same site so there is plenty of scope,” said Browning.