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Washington: VW declares its readiness for the U.S. market

By: Herman Wang
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Stefan Jacoby

WASHINGTON — Saying the German automaker has learned from its past mistakes, executives with Volkswagen declared Thursday that the company is prepared to reclaim its place as a top automobile brand in the United States.

“There’s a significant shift in the market to products and cars that we actually have to offer: more compact cars, modern engine technology, environmentally friendly engines,” said Stefan Jacoby, president and CEO of Volkswagen Group of America. “It’s a unique opportunity to actually come back in this market.”

VW opened its new North American corporate headquarters in suburban Washington, D.C. on Thursday, two months after announcing a $1 billion assembly plant in Chattanooga’s Enterprise South industrial park.

More than 50 years after introducing the iconic Beetle to the United States, VW aggressively is courting American consumers despite the economic headwinds facing other automakers such as General Motors.

VW previously operated an assembly plant in Pennsylvania from 1978 to 1988, but closed it when it failed to be profitable. This time around, VW officials said, the automaker’s product line is stronger, and with American consumers seeking more fuel-efficient vehicles due to rising gas prices, the company is poised to increase its market share, now at 2 percent in the United States.

VW sales increased by 1.3 percent this past year, bucking an industrywide trend of dropping sales.

“We made some mistakes,” Mr. Jacoby said. “We have to accept this. We’ve fixed these mistakes. Our quality has not been as the American consumer anticipated. Our quality is now absolutely competitive, (and) we are now preparing ourselves for a growing market. We are long-term committed to Chattanooga.”

VW, Europe’s largest carmaker, is in the midst of a takeover by Porsche, but VW officials dismissed any concerns that the ownership battle would derail the company’s goal of selling 800,000 vehicles a year in the United States by 2018. Porsche upped its stake in VW to 35.1 percent on Tuesday and has said it could increase that to above 50 percent in coming weeks.

“The Porsche guys are supporting this project,” said Dr. Martin Winterkorn, chief executive officer of Volkswagen AG.

VW officials said they remain on schedule to begin major construction on the plant at Enterprise South by Nov. 1. The company plans for the assembly plant to start operation in late 2010 or early 2011 and eventually produce 150,000 vehicles a year.

Chattanooga Mayor Ron Littlefield said crews have been working overtime to prepare Enterprise South for VW to begin construction. The city, Hamilton County and Tennessee together are providing $577.4 million in incentives to VW for the plant.

“We lost some days due to rain, but our contractors are just working longer hours and over weekends,” Mr. Littlefield said. “We’ve got one contractor working under lights, so we’re making good progress.”

U.S. Sen. Lamar Alexander, R-Tenn., attended Thursday’s grand opening near Washington and said he supports Gov. Phil Bredesen’s upcoming trip to Germany next month to recruit auto parts suppliers. Such businesses ultimately are expected to employ more people around Chattanooga than the assembly plant’s projected 2,000 employees.

“There’s no doubt that suppliers are coming to Chattanooga,” Sen. Alexander said. “The governor’s wise to go to Germany and make it easier for them to come.”

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