Volkswagen wants slice of American pie

Volkswagen AG CEO, Prof Martin Winterkorn wants Volkswagen to be the “biggest European carmaker” in the United States, selling as many as 800,000 cars every year by 2018. To help achieve that goal Volkswagen AG announced today they will be building their first manufacturing plant in the United States.

The German giant has approved expenditure of up to 1 billion USD to establish a new facility in Chattanooga, Tennessee. With a capacity of 150,000 vehicles per year the first stage of the new production line is set to open in 2011. The Chattanooga factory will employ around 2000 people and will join the Puebla facility in Mexico as the only other North American production facility for Volkswagen. The Jetta and Beetle are currently built in Mexico, but at this stage, no plans have been revealed as to the models that will be manufactured at the new US plant. Prof Winterkorn understands the importance of a strong presence in the US and this move will help Volkswagen stake a larger claim on the new car market. “The USA market is an important part of our volume strategy and we are now very resolutely accessing that market. Volkswagen will be extremely active there.”

Read Volkswagen’s official announcement after the jump.

Volkswagen Builds Factory in Tenessee, USA

Wolfsburg / Chattanooga, 15 July 2008 – Volkswagen is setting out to build a plant in Chattanooga, Tennessee, where vehicle production will be due to commence in early 2011. The supervisory board of Volkswagen AG today approved the plans and an investment volume of up to 1 billion USD (around 620 million euro). The Group’s management board had previously pinpointed Chattanooga as the site for its new plant. “The USA market,” said Prof Martin Winterkorn, CEO of Volkswagen AG, “is an important part of our volume strategy and we are now very resolutely accessing that market. Volkswagen will be extremely active there.”

The first stage of construction is designed to provide annual capacity for the complete production of 150,000 automobiles, including body-production, paint-shop and assembly operations. A cutting-edge modular production system at the plant will enable maximum flexibility. The first vehicle to be manufactured there will be a new midsize sedan tailored specifically to the US market. Volkswagen itself will employ a staff of approximately 2000 at the site over the medium term, while additional jobs will be created in the supplier and logistics sectors.

“This plant represents a milestone in Volkswagen’s growth strategy,” says Prof Winterkorn. “We will be selling 800,000 Volkswagen p.a. in the USA by 2018, and this new site will play a key role.” Volkswagen says the plant will help to permanently alleviate exchange-rate fluctuations. “This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region.” That success apparently includes having customers in the US come to perceive the company as a domestic manufacturer.

Volkswagen originally short-listed 25 potential sites for its US plant. The management board chose Chattanooga because it outperforms (though only slightly) the next-best candidate sites in terms, most notably, of providing an existing infrastructure of components suppliers, of disposing over a qualified workforce and of the availability of around 550 hectares of developed property with direct transport connections. Prof Winterkorn added: “We look forward to establishing an important mainstay for ourselves when we become the biggest European carmaker there.”