Chattanooga covets Audi deal

Chattanooga covets Audi deal

July 12th, 2011 by Mike Pare in Business Around the Region

Model Heather Park shows off an Audi A6 as reporters visit the Audi booth at the North American International Auto Show in January in Detroit.

Photo by Dan Henry/Times Free Press.

Audi has decided to build cars in North America, its chief executive said in a report Monday, and an automotive analyst said Chattanooga "has a shot" at the new plant.

"It makes a lot of sense to add capacity to Chattanooga," said Michelle Krebs, senior analyst for Edmunds.com, citing the new assembly plant that Audi parent Volkswagen opened in the city this spring.

Audi CEO Rupert Stadler told Automotive News that it's clear the premium automaker needs capacity in the United States. Decisions about a plant location, models and capacity are to come within three years, he said in the report.

The report also said Audi is looking at building an engine and transmission plant in North America, one the company could share with the VW brand division.

Chattanooga's chief economic development group said it's working to build ties with Audi officials.

"We've been working hard to build relationships with Audi and other members of the VW family of brands," said J.Ed. Marston, the Chattanooga Area Chamber of Commerce's vice president for economic development. Marston declined to comment on any specific project.

VW in May opened its Chattanooga plant and is producing over 100 Passat sedans a day, local factory officials said last week.

The plant utilizes a portion of the 1,340 acres on which the VW plant sits. VW officials have said they could build a plant mirroring the existing one and double capacity to 500,000 vehicles a year.

VW has an option on another 1,000 adjacent acres at Enterprise South industrial park.

Martin Winterkorn, Volkswagen AG's chief executive, said at the plant's grand opening that officials may have a decision related to Audi production in North America within a year.

"With the growth of Audi, we have to think about our strategy in the U.S.," he said.

Krebs said Tennessee has been generous with its financial incentives with VW.

"I think Tennessee would have a leg up on most," she said.

But timing is a big factor, Krebs said, noting it has said for years that U.S. production is under consideration if sales improve.

Audi sold 101,629 vehicles in the U.S. last year, up 23 percent over 2009, according to the Ingolstat, Germany-based company.

The premium carmaker also hit an all-time sales high in the most recent quarter.