Volkswagen's manufacturing chief says the carmaker expects to pick a site for a North American auto plant by summer, and an auto analyst believes the U.S. and Chattanooga remain in the hunt.
"They'd have to build a new greenfield plant [in Mexico]," said Aaron Bragman of IHS Automotive. "They might do that in Chattanooga as well."
Michael Macht, Volkswagen AG's head of manufacturing, told Automotive News Europe that while Mexico has advantages, "Made in USA" is an important statement.
He told the publication there's still capacity at VW's Chattanooga location.
The VW Chattanooga plant utilizes a portion of the 1,340 acres on which it sits. VW also has an option on another 1,000 adjacent acres at Enterprise South industrial park.
Officials for Audi, VW's luxury brand, have said they want to have the plant, its first in North America, up and running in 2015.
While VW has yet to determine which Audi model it will assemble there, Macht told Automotive News that the plant decision is closely linked with the company's desire to bring another Volkswagen sport utility vehicle, larger than the Tiguan, to the U.S.
Bragman said he believes VW is looking at a new SUV that could be built off the platform of the Passat, the midsize sedan VW makes in Chattanooga.
"Chattanooga has a lot of room for expansion," he said.
Still, Bragman said Mexico would offer a less expensive path for a new plant, and it would provide an easier launching pad for VW to grow sales in the rest of Latin America.
However, a number of auto companies have announced new plants in Mexico and the labor market there could tighten, he said.
J.Ed. Marston, the Chattanooga Area Chamber of Commerce's vice president of marketing, said local officials continue to build relationships with VW.
"We're making sure we've got the relationships and have everything in place to take advantage of any expansions or VW-related lines," he said.
In addition to Chattanooga, Huntsville, Ala., has been mentioned as a potential future location for the Audi plant by an Alabama-based industry analyst.
VW is looking to rapidly ramp up sales and production in North America. The company is aiming to sell 1 million VW and Audi brand vehicles annually by 2018 in the U.S.
At the Chattanooga plant, VW officials have said they could expand the factory by mirroring the existing one and more than double capacity to 500,000 vehicles a year.
Contact Mike Pare at firstname.lastname@example.org or 423-757-6318.