Audi may lean to Mexico for new auto plant, report says

Audi may lean to Mexico for new auto plant, report says

January 17th, 2012 by Mike Pare in News

Audi unveiled the new S4 luxury vehicle at the COBO Center during the 2012 North American International Auto Show.

Photo by Dan Henry/Times Free Press.

Volkswagen's luxury brand Audi may be leaning toward Mexico for a North American assembly plant, according to WardsAuto, an automotive industry website.

The report cited Mexico's lower labor costs and also said a facility there would allow Audi to export vehicles to South America and even to Europe if necessary, without paying excessive import and export tariffs.

A top Audi executive at the North American International Auto Show last week in Detroit cited Chattanooga as an "attractive potential location" for its first North American production plant.

But Audi of America President Johan de Nysschen said the VW brand already has aggressive plans for its Chattanooga site. He added, though, that there was no final decision yet.

In addition to a portion of the 1,300 acres in Enterprise South industrial park where VW built its local plant, the company has an option for 1,000 adjacent acres.

Last Friday, Tennessee Gov. Bill Haslam said state officials have had many discussions with Audi. He said he wants the state to boost upfront cash incentives to lure industrial prospects such as Audi, which is a subsidiary of VW.

Audi sold a record 117,561 vehicles last year in the United States.

Michelle Krebs, senior analyst for Edmunds.com, another auto industry website, has said she believes an Audi plant will go to the U.S. and not Mexico.

"Typically, you go to Mexico to build cost-sensitive vehicles and lower-priced vehicles," she said.

Krebs said both Honda and Nissan have announced new plants in Mexico to build small cars. VW has a plant in Puebla, Mexico, which assembles the Jetta and the Beetle.

Krebs said the only luxury car made in Mexico is a Cadillac SRX crossover.

In addition to Chattanooga, Huntsville, Ala., has been mentioned as a potential site for Audi.

Last week The Financial Times cited an Audi official as saying "seven or eight sites" in the U.S., Canada and Mexico have been looked at for the Audi plant, and that the automaker could be producing a model within three years of deciding where to build its factory.

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