Chattanooga OKs work for possible VW sites

Chattanooga OKs work for possible VW sites

February 13th, 2013 by Mike Pare in Business Around the Region

Volkswagen's Crossblue SUV is designed for American motorists, according to the automaker.


The Volkswagen brand began the year with a 17.4 percent hike in worldwide sales over a year ago, led by growth in North America and China, the company reported Tuesday.

Total sales hit 491,900 vehicles in January in spite of continued weakness in Europe, the German automaker said in a news release.

Sales in North America were up 10.6 percent to 43,800 vehicles in January over the same month in 2012. Of that, 29,000 vehicles were sold in the United States, the automaker reported, up 6.7 percent.

The brand reported a 43.7 percent jump in January sales in the Asia-Pacific region, of which 235,000 units were delivered in China.

Volkswagen hasn't made a commitment, but the city agreed Tuesday to finalize site work on two parcels near the automaker's Chattanooga plant targeted for possible future expansion.

A city panel OK'd spending up to $7.52 million more on the work adjacent to the plant, pushing the total price tag to about $10 million.

City Engineer Bill Payne said state money is paying for finishing the earth work that was originally promised under an agreement between the city, the state and VW.

When done by the end of the year, both sites will be "ready to receive whatever construction VW wants to do," he told the city's Industrial Development Board.

One tract is located next to the plant where VW officials have talked about potentially mirroring the existing factory. The other parcel is adjacent to VW's nearby supplier park and could hold future suppliers for the German automaker.

Payne said no plant expansion announcement is imminent. But VW is weighing the production of a new sport utility vehicle, tentatively dubbed the Crossblue and introduced at the Detroit auto show last month. A decision to move forward on the crossover could come within weeks.

Chattanooga is identified as a potential production location if the company green lights the SUV. The city is competing with VW facilities in Mexico as the company aims to keep assembly in North America.

Earlier this week, Reuters quoted unnamed VW executives saying the Chattanooga plant and its Puebla, Mexico, facility will be updated to accommodate an innovative platform for new models -- the latest Golf in Puebla and the crossover in Chattanooga.

Clint Brewer, an assistant commissioner for the state Department of Economic and Community Development, said the VW plant was built to accommodate multiple product lines.

"We feel like Tennessee and Chattanooga is always in the discussion," he said about competing with Mexico for new VW production. "I think Chattanooga has got great advantages if you're talking about the U.S. market."

VW officials have cited a series of potential expansion steps at the plant, should the carmaker decide to make the investment.

Already, VW has said it would spend $7 million to tweak the plant to bolster production to 170,000 vehicles a year, up 20,000 from the current capacity.

A second line could be added to the paint shop, and assembly ultimately could hit 250,000 vehicles a year.

Additionally, the plant could be mirrored on the adjacent parcel to double capacity, though VW hasn't offered a time frame. The facility would have the potential to produce 595,000 vehicles a year, according to VW.