Chattanooga plays prominent role in VW's $7 billion push in North America

Chattanooga plays prominent role in VW's $7 billion push in North America

January 13th, 2015 by Mike Pare in Business Around the Region
“There's even more in the pipeline." ”
VW CEO Martin Winterkorn

Martin Winterkorn, left, Chairman of the board of management of Volkswagen AG, and Heinz-Jakob Neuber, left, Member of the board of management for the Volkswagen brand introduce the Volkswagen Cross Coupe GTE Concept at media previews for the North American International Auto Show in Detroit on Sunday.

Martin Winterkorn, left, Chairman of the board of...

Photo by Associated Press /Times Free Press.

DETROIT -- Volkswagen is ready to invest $7 billion in North America over the next five years, with plans for an array of new vehicles including a refreshed Passat sedan, a midsize sport utility vehicle planned for 2016 and potentially a second SUV, all made in Chattanooga.

"The VW brand will return to attack mode," VW Chief Executive Martin Winterkorn said Monday at the North American International Auto Show.

The midsize SUV dubbed the CrossBlue is already targeted for Chattanooga's plant, where production will start in late 2016. Demand remains strong for midsize SUVs and with the compact SUV market surging, VW is moving aggressively to shore up its entire sport utility segment.

The result?

"There's even more in the pipeline," Winterkorn said.

In 2017, a longer version of the Tiguan compact SUV will hit the market. Reports say its production is slated for Mexico. Chattanooga would receive the Cross Coupe GTE revealed Sunday if its assembly gets the go-ahead.

The Cross Coupe GTE, a slightly smaller version of the CrossBlue, would be built on the same platform as its larger cousin, according to VW.

"The new SUV concept might be perfect for America," Winterkorn said.

The most immediate change will come via the new version of the Passat, which will debut late this year, likely in the fourth quarter, officials said.

"There will be a major, major face-lift of the Passat," said Michael Horn, Volkswagen Group of America's CEO.

Winterkorn said the renewed Passat "will be more attractive than ever," without giving any details.

The Passat makeover heralds VW's commitment to bring a significant refresh to its vehicles every three years instead of five, Horn said. The German automaker would then totally remake the model every five years instead of seven, he said.

"This is one of the most massive shifts for the company," Horn said. "We'll have to work much faster."

Winterkorn said VW still aims to sell 1 million vehicles in North America by 2018, including Audi, Porsche and other VW Group brands. VW sold more than 600,000 in the region last year.

"We're fully committed to North America," said Winterkorn.

Michael Horn, CEO, Volkswagen Group of America, is pictured with the Golf and Golf GTI in this contributed photo from VW.

Michael Horn, CEO, Volkswagen Group of America, is...

VW on Monday won the North American Car of the Year Award with its new Golf and Golf GTI, beating out the Ford Mustang and Hyundai Genesis. Ford's all-new F-150 won truck of the year honors at the Detroit show.

The German carmaker's signature VW brand experienced a down year in 2014, though, with sales off 10 percent from 2013 in the U.S. Passat sales also were off in 2014 as the market moved to SUVs and trucks, lines in which VW is considered weak.

"In the SUV market, we're not fully playing right now," Horn said.

The Cross Coupe GTE is part of the company's answer.

The Los Angeles Times noted that VW has said the design of the GTE is less concept and more production-ready. The SUV is aimed at an upscale audience, similar to fans of the brand's current Touareg and Tiguan crossovers, it said.

Autoblog terms the Cross Coupe concept "relatively handsome" and notes it is borrowing its basic styling language from the CrossBlue shown off at the 2013 Detroit show.

Heinz-Jakob Neuber, a member of the board of management for the Volkswagen brand, said the midsize CrossBlue SUV and its slightly smaller Cross Coupe GTE cousin will have German roots but be tailored to American tastes.

He said the concept GTE "demonstrates the technology expertise of the new model series."

"It makes a major statement in the auto industry," Neuber said, citing the concept's plug-in electric hybrid drive train. If produced, the vehicle also is to hold more conventional engines.

Besides adding new vehicle lines, Horn said VW plans to have more dealers in the U.S. VW's dealer network now is at about 650, but he foresees adding about 100 more as sales improve.

Horn said that while sales were off in the first nine months of 2014, the numbers were up in the last quarter over 2013 as new products such as the redesigned Golf and Jetta were introduced.

Winterkorn said markets around the world are fighting headwinds, such as in South America and Europe.

"We don't complain about challenges," he said. "We tackle them."

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.


This story was corrected at 2:35 p.m. to note that Volkswagen is ready to invest $7 billion in North America over the next five years, not $5 billion.