Volkswagen will export its Chattanooga-made sedan to Mexico and Canada for sale, but there are no plans to ship cars to China.
"Volkswagen Chattanooga will be producing the new midsize sedan for the U.S. market and for exports to Mexico and Canada," said Guenther Scherelis, general manager of communication for VW in the city.
North America is seen as a key market for VW as it tries to sharply grow sales here and help it overtake Toyota worldwide.
While the new sedan won't be exported to China, Scherelis said the vehicle's platform is expected to be used to manufacture a sedan in the Chinese market. Platforms are collections of key vehicle components such as transmissions or axle assemblies and help automaker's curb costs.
VW officials have said the company is building more plants in China to keep up with demand.
Frank Fischer, CEO of VW in Chattanooga, has said the layout of the Chattanooga plant will be the blueprint for the Chinese plants.
VW said the China factories will double production in its biggest market to 3 million cars in four years.
Ulrich Hackenberg, head of Volkswagen's brand development, said in an interview with Bloomberg that officials see demand for the midsize sedan growing in other countries such as China.
"Our production pattern allows us to transfer vehicles from one plant to another at relatively low effort," he said.
The $1 billion Chattanooga plant is slated to start production early next year with capacity to make 150,000 cars a year. The carmaker has a goal of about tripling sales in the U.S. to 800,000 VWs and 200,000 Audis.
Volkswagen Canada this month announced September new vehicle sales of 3,276 units, pushing the year-to-date total to 33,411, for an 11 percent gain over 2009.
Bloomberg contributed to this report.