VW looks at building Scout-branded pickup, rugged SUV in U.S.

Volkswagen Group plans to electrify the Scout brand with the aim to form an independent company to design, engineer and manufacture pickups and rugged SUVs for the American market, the company said Wednesday.

The start of production is planned for 2026 in the United States at a location that wasn't stated in a news release.

Herbert Diess, Volkswagen Group's chief executive, said in a statement that electrification provides "a historic opportunity to now enter the highly attractive pickup and R-SUV segment as a group, underscoring our ambition to become a relevant player in the U.S. market."

The decision by the company's board of management was confirmed by the supervisory board of the Volkswagen Group.

Last month, a report from a German magazine said Volkswagen is looking at building a second plant in the United States, and it could sit next to its existing Chattanooga factory.

Manager Magazin, citing unnamed sources, said the production capacity in the U.S. could more than double to 600,000 vehicles annually.

Scott Keogh, Volkswagen Group of America's chief executive, said in March that he recently returned from the Chattanooga plant and a visit with Tennessee Gov. Bill Lee and Chattanooga Mayor Tim Kelly.

"We had good meetings with Lee, the team in Nashville and the mayor," he said in a virtual meeting with journalists. "It's a great plant and has a great future."

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A separate, independent company will be established in the U.S. this year as the Volkswagen Group moves the iconic Scout into the electric vehicle space, the company said.

The first prototypes are to be unveiled next year, with the electrified Scout brand built on a new technical platform concept that brings pickup and R-SUV credibility beyond the existing Volkswagen Group portfolio, according to the release.

"After Volkswagen's successful turnaround in the U.S., we are now taking the opportunity to further strengthen our position in one of the most significant growth markets for EVs," Diess said.

(READ MORE: Volkswagen plans job fair on Saturday in Chattanooga)

Success in the R-SUV and pickup segments are seen as a key lever to increasing profitability in the U.S. and achieving a targeted market share of 10%, according to VW.

Arno Antlitz, the group's chief financial officer, said in a statement the company will establish this year the separate unit and brand within the company to be managed independently.

"This aligns with the new Group steering model - small units that act agilely and have access to our tech platforms to leverage synergies," he said.

Classic SUVs such as the International Harvester Scout II were produced in the 1970s. VW obtained the Scout name when its trucking subsidiary merged with Navistar last year.

- Compiled by Mike Pare