Most of the new introductions [at the recent Los Angeles Auto Show] were crossovers and small SUVs.
Staff Photo by Angela Lewis Foster / Volkswagen's Atlas SUV, shown here at a recent Chattanooga Area Chamber of Commerce event, is seen as a key new entry in the U.S. as the automaker tries to rebound from its diesel emission issues.Chattanooga's Volkswagen plant is poised at the start line of a new milestone as workers gear up for production on the Atlas sport utility vehicle as early as this week.
For months, VW workers have refined the Atlas assembly process until the factory is now on the verge of making the first SUVs, which will be shipped to dealers nationwide, according to the automaker.
The seven-seat SUV, the biggest vehicle VW has ever made in America, won't go on sale until early next spring when the pipeline to the dealer network is full. But dealers say they can't get them too soon to take advantage of a growing SUV market.
Jesse Toprak, chief executive of auto research site Carhub.com, said the buyer appetite for SUVs is "extremely healthy."
"Most of the new introductions [at the recent Los Angeles Auto Show] were crossovers and small SUVs," he said.
The transaction price of SUVs is at a high level, according to industry group Kelley Blue Book.
"Climbing transaction prices reflect the shift in consumer preference from cars to more expensive trucks and SUVs," said Tim Fleming, a KBB analyst. "Manufacturers with strong truck and SUV lineups are currently seeing record pricing."
For example, the average November price for a midsize SUV like the Atlas was $37,057, according to KBB. That's up nearly one-half percent from October and a full 1 percent above November 2015.
Meanwhile, transaction prices for compact SUVs, which is one the fastest growing segments in the auto industry, also are strong, KBB said.
The average November price was $26,700 in the segment. That's up one-half percent over October and 0.9 percent above a year ago, according to Kelley.
Subcompact SUVs, which have seen the most sales growth in the past year, are showing signs of slowing, KBB reported. Prices fell about 1 percent in November year over year.
At the same time, there has been talk within Volkswagen about more vehicle production beyond the Atlas, potentially another SUV.
Toprak said SUV buyers represent an "extremely wide" demographic base.
"I would not be surprised there's more emphasis," he said, suggesting there could be future production of a smaller-type crossover at the Chattanooga plant.
In addition, VW has publicly discussed electric vehicle production in North America by 2021. Toprak believes the Chattanooga plant would be "the top candidate" for that assembly over VW's Mexico plant because most electric vehicles are sold in the United States.
At the VW plant on Monday, the huge parking lot was nearly full as the factory brings on more workers for the production of the Atlas alongside with the Passat sedan it has assembled since 2011.
Earlier this fall, VW staffing contractor Aerotek said it's hiring 1,100 new employees by mid-April 2017. The use of Aerotek is the typical way VW hires its production employees. The new plant workers would put employment at about 3,400, a record number.
VW officials have said the number of new production employees would continue to grow above the 1,100 figure depending on demand for the SUV. Two years ago, VW pledged to hire 2,000 workers as part of its $900 million plant expansion to assemble the SUV.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.