Volkswagen looking at stopping Passat production in Chattanooga, may shift to making all SUVs

Contributed photo by Volkswagen / A 2020 Aurora Red Metallic Passat R-Line was the 1 millionth vehicle produced at Volkswagen's Chattanooga assembly plant.

Volkswagen is looking at stopping production of the Chattanooga-made Passat sedan, which is the first vehicle ever assembled at the plant.

As sales of sedans trend down and buyers continue to spend on new SUVs, industry website Wards Auto says that U.S. production of the Passat will cease in 2023.

But Mark Gillies, senior manager of product and technology communications for Volkswagen of America, said that global VW brand chief Ralf Brandstatter hasn't put a date on stopping production of the Passat.

He said that Brandstatter said in an interview with Wards that there are plans to stop production "at a later date."

Wards said that as production of the electric ID.4 SUV launches in Chattanooga in 2022 and reaches full capacity in 2023, that's when Passat output ends.

The Chattanooga plant, which started production in 2011, would then be assembling an all-SUV product line.

Michelle Krebs, executive analyst for Autotrader, said the midsize sedan market has "really plummeted."

"People prefer to have a sport utility vehicle over a sedan," she said.


* 2019 - 14,123* 2018 - 41,401* 2017 - 60,722* 2016 - 73,002* 2015 - 78,207* 2014 - 96,649* 2013 - 109,652* 2012 - 117,023Source: Volkswagen of America

Krebs said that Passat never was a huge player in the U.S. within the segment, which is dominated by vehicles produced by Toyota and Honda.

In 2019, Passat sales in the U.S. fell 66% from the prior year to 14,123, according to Volkswagen of America. In 2012, Passat's U.S. sales were 117,023.

But the Atlas SUV posted sales last year in the U.S. of 81,508, up 37%, the company reported.

Volkswagen has introduced the Atlas Cross Sport, a five-seater based off the seven-seat Atlas. Also, the company is spending $800 million at the Chattanooga plant to ready it for production of the ID.4 electric SUV.

The ID.4 is part of a huge investment the German automaker is making on battery-powered vehicles.

Krebs said VW is doubling down on its electric vehicle strategy. Just last week, the company announced worldwide spending of $86 billion over the next five years on electrics.

"That's a huge bet," she said.

Krebs said she's not saying electrification is a sure thing.

"There will be a lot players," she said. "It's a pretty risky bet. There's a lot of ifs in it."

The analyst said the country doesn't have a full charging infrastructure, for example.

Still, President-elect Joe Biden is expected to push for electric vehicles and infrastructure, she said.

"We'll see where the Senate goes on that," Krebs said.

Gillies said that, at the moment, there are plans to produce in Chattanooga in the short-term the Atlas and Atlas Cross Sport SUVs, the Passat and the ID.4.

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