Passat may go to Korea, Middle East

Passat may go to Korea, Middle East

February 18th, 2011 by Mike Pare in Business Around the Region


VW will begin production in Chattanooga in March, with dealers to start receiving Passats in June and July, according to the automaker.

Volkswagen's Chattanooga-made Passat is expected to be sold not just in North America but in Korea and possibly the Middle East.

Jonathan Browning, chief executive of Volkswagen Group of America, told Automotive News that sales of the sedan won't be limited to just the United States, Canada and Mexico.

Production of the all-new Passat is slated to start at the $1 billion Chattanooga factory next month.

Michelle Krebs, senior analyst for, said it's not uncommon for German auto companies with U.S. plants to export overseas.

She said that BMW's Spartanburg, S.C., plant just started making the X3 sport utility vehicle, and much of that production is intended for outside the U.S.

The Mercedes-Benz plant in Vance, Ala., is gearing up to produce the next generation C class sedan, and some of that is slated for export, Krebs said.

"It's a good move," she said about VW's plans. "It's part of a bigger trend."

VW declined Thursday to expand on Browning's remarks.

But in an earlier request to activate the Chattanooga plant site as a foreign trade zone, the company projected that about 20 percent of the facility's shipments would be exported.

The plant is expected to produce 150,000 vehicles annually when fully ramped up.

Kreb said the Middle East may have been targeted because VW already sells well there and buyers tend to like larger vehicles. A key selling point of the new Passat is that it's larger than the vehicle it's replacing.

In terms of Korea, a new trade agreement is aimed at opening up that market, she said. Krebs said that could apply to VWs made in the U.S.

Frank Fischer, chief executive of VW's Chattanooga operations, said earlier that the first cars for customers will be produced in March.

He said a grand opening of the plant will be in the second quarter with dealer sales to begin in the third quarter.

While selling overseas could help boost carmaking at the plant, it also would smooth out production, Krebs said.

"If the market in the U.S. softens, you've got others to rely on," she said. "It's a hedge on that market."