Volkswagen is motoring ahead with the second expansion of its Chattanooga plant to assemble a five-seat Atlas sport utility vehicle.
Also, the factory on Monday marked a production milestone with the completion of the 700,000th Passat sedan assembled at the plant.
A $1.7 million contract was approved by a Chattanooga panel to buy door seal equipment for the plant's assembly of the five-seater.
City Engineer Bill Payne told the city's Industrial Development Board on Monday that because the doors will be different from the seven-seat Atlas SUV, the additional equipment is needed.
The contract is funded through incentive money left over in a memorandum of understanding with the city and state that was approved after VW announced it was building the seven-seater, Payne said.
He said the contract with ThyssenKrupp System Engineering Inc. was a sole source bid because a second vendor used in the past was bought by VW competitor Tesla.
"It's no longer providing quotes to Volkswagen," he said.
In March, VW officials said the German automaker is spending $340 million for a third vehicle in Chattanooga.
"It's exactly what we need to continue our growth momentum," said Hinrich J. Woebcken, Volkswagen Group of America's president and chief executive, at the Chattanooga plant in March.
The addition of the new SUV comes as sales of the Passat midsize sedan are falling as buyers turn to snatching up SUVs and trucks off dealer lots. But, next year, VW is expected to make a new version of the sedan to bolster sales.
The 700,000th Passat assembled at the plant since production started in 2011 is a 2018 Passat GT, finished in Reflex Silver, with two-tone black and grey interior. The limited-edition model uses the 3.6-liter VR6 engine and a 6-speed DSG Tiptronic dual-clutch automatic transmission, according to VW.
"The history of Volkswagen Chattanooga is intertwined with the history of the U.S. Passat. As we grow and add models, we take pride in continuing to produce quality Passats in the state of Tennessee," said Antonio Pinto, CEO of Volkswagen Chattanooga, in a statement. "I am very proud of our team for reaching this important milestone and look forward to more to come."
The 2018 Passat GT was designed by the company's North American engineering hub in Chattanooga along with VW's Design Center in California based on extensive feedback from U.S. customers and dealers, the company said.
"The Passat GT is an example of how the Volkswagen North American Region is incorporating a local perspective into our global engineering expertise," said Dr. Matthias Erb, chief engineering officer and head of product strategy for the region. "The collaboration between U.S. engineers and designers allows us to create vehicles that meet the needs and desires of customers here."
The Passat GT, with a 280 horsepower and 258 pound-feet of torque, offers power and luxury-class driving comfort, according to VW. EPA estimated fuel economy is 19 mpg city and 28 mpg highway. Features include a black roof, 19-inch aluminum-alloy wheels, a honeycomb grille, GTI-like red accents, and a sport suspension that lowers the car's stance.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.