Volkswagen's new Atlas SUV is seen by the company as key to growing its U.S. sales. The Atlas, unveiled to VW Chattanooga employees late last year, is slated to start appearing at dealerships next month.COMPACT SUV SALES
U.S. sales in March and year to date: * March: 254,454, up 4.9 percent over a year ago * Jan.-March: 684,443, up 5.2 percent Source: Kelley Blue Book
Volkswagen plans to assemble a second sport utility vehicle in its Chattanooga plant as the company races to grow its SUV family and further bolster production and jobs at the factory.
VW wants to produce a small five-seat SUV to go with the larger seven-seat Atlas in Chattanooga, Hinrich Woebcken, head of Volkswagen's North American operations, told reporters at the New York International Auto Show on Wednesday.
Bill Kilbride, the Chattanooga Area Chamber of Commerce's chief executive, termed a second Chattanooga-made SUV "an important move for a lot of reasons."
"Anybody who doubts Volkswagen is in this for the long haul should take notice," he said.
While Woebcken declined to say when assembly of the smaller SUV will start at the plant, which also produces the Passat midsize sedan, The Wall Street Journal said the VW official described the vehicle as a "brother or family member" of the Atlas.
Mike Randle, publisher of Southern Business and Development magazine, said SUV sales are hot.
"This is SUV country," he said. "SUV sales are up."
In the first quarter of 2017, total SUV sales in the United States rose 5.5 percent over year-ago levels, while U.S. car sales fell by 11.5 percent, according to motorintelligence.com
While Woebcken didn't give a timeline on assembly of the second Chattanooga-made SUV, Randle expected it would happen "as fast as they can pull it off."
It's unclear how much a second SUV would impact employment at the plant, which is adding about 1,100 workers and aiming for a headcount of 3,400 when Atlas production is fully ramped up.
But Kilbride said that more production at the plant helps optimize the equipment.
"When they're running these lines anything less than capacity, it gets herky-jerky on the hours people are working," he said.
Kilbride said assembly of a small SUV makes sense for Volkswagen.
"Watching the cars pass over the bridge, you see a lot of five-seat SUVs," he said.
Michael Harley, an analyst for Kelley Blue Book, said VW wants to make sure it's "covering all the main bases" with another potential SUV in addition to the Atlas, which is expected to hit dealerships in about a month.
Because the Atlas is being assembled on VW's recently installed flexible MQB platform, the auto maker could easily shift to making a smaller SUV alongside the larger one, Harley said.
"They could use existing platforms, power trains," he said. "It's just building some sheet metal."
Last year, VW finished spending $900 million, including more than $600 million in Tennessee, to ready the Chattanooga plant to assemble the Atlas.
In addition to the Atlas, VW also is introducing a larger, redesigned Tiguan SUV, which is expected to appear at dealerships this summer.
Volkswagen earlier this year pleaded guilty to three criminal charges for rigging 590,000 diesel-powered vehicles in the U.S. to cheat on diesel emissions tests. Fines, penalties and other costs are expected to top more than $20 billion.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.