VW mulls SUV opportunity: Chattanooga could begin producing vehicles in 2015

VW mulls SUV opportunity: Chattanooga could begin producing vehicles in 2015

May 8th, 2013 by Mike Pare in Business Around the Region

VW CrossBlue

Photo by Contributed Photo/Times Free Press.

CROSSBLUE COUPE

Segment: SUV with TSI plug-in hybrid system

Size: Holds up to five people

Acceleration: 0 to 62 mph in 5.9 seconds

Fuel economy: 79 mpg in electric mode; 34.1 mpg combined

CROSSBLUE

Segment: SUV with TDI plug-in hybrid system

Size: Holds six or seven people

Acceleration: 0 to 60 in 7 seconds

Fuel economy: 89 mpg in electric mode; 35 mpg combined

Source: Volkswagen

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VW CrossBlue Coupe

Photo by Contributed Photo/Times Free Press.

Sport utility vehicle and truck sales are rising in the U.S. as gas prices retreat, creating an opening for possibly two new Volkswagen SUVs which could be made in Chattanooga.

A five-seat SUV concept dubbed the CrossBlue Coupe, which is a cousin to the seven-seat CrossBlue unveiled in Detroit in January, was shown off by VW at a recent key auto show in China.

According to Autoweek, production is slated for Chattanooga in 2015 if the automaker decides to move ahead with the CrossBlue.

Volkswagen officials locally declined comment, but the automaker is clearly looking at revving up its SUV lineup in the U.S.

Aaron Bragman, Detroit bureau chief for Cars.com, said he thinks VW probably will build the CrossBlue in Chattanooga if the company OKs production.

"It's the hottest segment in the market," said Bragman about SUVs.

Last month's vehicle sales showed how important the growing SUV market is to automakers.

While U.S. passenger car sales rose 3.1 percent in April over a year ago, sales of light trucks, which includes SUVs, sped ahead by 14.7 percent.

Ford reported that sales of its Escape SUV were the strongest in April since the model's launch 13 years ago. The American automaker posted a 52 percent increase in Escape sales last month compared to a year ago.

Jonathan Browning, Volks-wagen Group of America's chief executive, said in January at the North American International Auto Show in Detroit that the automaker wants a bigger share of the growing SUV segment.

He said the midsize SUV market is expected to grow by about 20 percent over the next several years.

Volkswagen's sales of its Chattanooga-made Passat were down by 10.2 percent in April from a year ago, although Passat sales through the first four months of the year were still up by 1 percent. VW announced last month plans to cut 500 contractor jobs this spring at its Chattanooga assembly plant because of less-than-expected sales of the Passat.

Klaus Bischoff, head of design for the Volkswagen brand, said at the Shanghai Auto Show recently that the disproportionately high growth in the SUV segment gives VW's designers the chance to implement an even stronger diversification of models.

"In the CrossBlue Coupe, we are showing the potential of our Volkswagen design DNA," he said in a statement. "This concept vehicle will undoubtedly have an influence on future SUV models."

Like the full-size CrossBlue concept unveiled in Detroit in January, the CrossBlue Coupe displayed in Shanghai was powered by a plug-in hybrid system. The Coupe had a V6 turbo direct gasoline injection engine working together with two electric motors.

Officials have said the CrossBlue, if it's produced, would also have more traditional power trains options to fit the market.

Bragman said the platform for the Chattanooga-made Passat would work for a midsize SUV.

"It's a perfect platform," he said.

VW officials have previously said that the Tennessee plant and the automaker's facilities in Mexico would be considered to produce the CrossBlue to keep its assembly in North America.

While the CrossBlue is still a concept vehicle, top VW officials are expected to make a decision this year on whether to move ahead with production and where it would be assembled.