Volkswagen eyeing another crossover to be made in Chattanooga

Volkswagen eyeing another crossover to be made in Chattanooga

March 15th, 2017 by Mike Pare in Business Around the Region

Volkswagen cars are lifted inside a delivery tower of the company in Wolfsburg, Germany, Tuesday, March 14, 2017. The CEO of German automaker Volkswagen says the United States remains a "core market" for the company despite its diesel emissions scandal and has underlined that it hopes to expand there. Matthias Mueller made the comments Tuesday at the company's annual news and investor conference at its headquarters in Wolfsburg, Germany. (AP Photo/Michael Sohn)

Photo by Associated Press /Times Free Press.

Volkswagen is looking at launching a new crossover that would come from the Atlas sport utility vehicle that's currently under production at its Chattanooga plant, according to a report.

Wards Auto reported this week that the German automaker is eyeing a crossover derivative off the Atlas SUV. The move comes as VW tries to rapidly ramp up sales of SUVs in the U.S., with plans for the seven-seat Atlas to hit dealerships this spring.

Matthias Mueller, CEO of Volkswagen, attends a press conference of the German Volkswagen company in Wolfsburg, Germany, Tuesday, March 14, 2017. (AP Photo/Michael Sohn)

Matthias Mueller, CEO of Volkswagen, attends a press...

Photo by Associated Press /Times Free Press.

VW’S Atlas

Atlas SUV production started in December at the Chattanooga plant, which is bringing on about 1,100 more employees for its assembly alongside the Passat sedan. That will push the factory’s headcount to about 3,400 workers, according to VW.

Matthias Mueller, left, CEO of Volkswagen and Frank Witter, right, CFO of Volkswagen, talk prior to a press conference of the German Volkswagen company in Wolfsburg, Germany, Tuesday, March 14, 2017. (AP Photo/Michael Sohn)

Matthias Mueller, left, CEO of Volkswagen and Frank...

Photo by Associated Press /Times Free Press.

During Volkswagen's annual meeting with analysts, VW's chief executive Tuesday reaffirmed the company's plan to pump up U.S. sales in the aftermath of the emission scandal involving VW's diesel engines, including the Chattanooga-made Passat TDI.

"We stand firmly by our investment decisions and want to play a considerably larger role in the U.S. in the future," said Volkswagen Group CEO Matthias Mueller, saying that America "continues to be a core market."

VW's SUV sales in the U.S. make up about 12 percent of its total while the entire market is at 60 percent light trucks and SUVs, Wards reported.

Michael Harley, an analyst for Kelley Blue Book, said he thinks VW wants to make sure it's "covering all the main bases" with another potential SUV.

He said that coupe SUVs, smaller than the midsize Atlas, are a hot segment.

Harley said the VW plant, because the Atlas is being assembled on the automaker's recently installed flexible MQB platform, could easily shift to making a coupe alongside the larger SUV.

"They could use existing platforms, power trains," he said. "It's just building some sheet metal."

The KBB analyst said Mercedes and BMW already are doing so.

"There's no reason VW won't try to jump into that segment," he said. "Almost definitely it would be made in Chattanooga.

Harley said he thinks the Atlas will do "very well" when buyers start seeing them in dealerships.

VW has priced the Atlas, the biggest vehicle the automaker has ever made in America, at about $30,000 to start, which Harley said hits "the sweet spot" in the segment.

Also, VW plans to offer a new, longer Tiguan SUV this summer to help drive more U.S. sales.

Harley predicted VW sales will bounce back fairly quickly with diesel emission issues looking more like they're moving in the company's rear-view mirror.

"I'm not hearing a lot about the diesel thing" in the news, he said. "I don't think the Atlas will be affected one bit by the diesel thing. Consumers will be quick to run and check it out."

Meanwhile, VW said earlier this year it's looking at its options for possibly filling the pickup truck segment in America, including potentially retooling the Atlas SUV, an official says.

"This is one option," said Dr. Matthias Erb, head of product strategy for VW in the United States and who oversees the automaker's engineering and planning center in Chattanooga.

Other options include selling VW's Amarok pickup, which isn't sold now in America, or not offering a truck for the U.S. at all, he said.

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