A new Volkswagen sport coupe may be produced in Chattanooga as part of VW's effort to expand its vehicle production in North America.
VW also unveiled plans Monday to invest $1 billion in Mexico to assemble a three-row compact sport utility vehicle.
The Sport Coupe Concept GTE, a four-door fastback that debuted last week in Geneva, Switzerland, is viewed as replacing the CC and eventually could be built in the U.S., VW executives told Automotive News.
One VW source said volumes no longer had to reach the 100,000 mark before it made economic sense to build in Chattanooga. That's due to the flexibility provided by a new vehicle assembly platform being installed as part of the Tennessee plant's current expansion.
VW is spending $900 million to enhance the Chattanooga plant to make a new midsize SUV by the end of 2016. The work also calls for creating 2,000 more jobs in Chattanooga. The plant currently makes just the Passat midsize sedan.
The existing CC is assembled in Europe and shipped to the U.S. Fewer than 10,000 were sold in the U.S. last year, a fraction of the Passat's nearly 97,000.
The concept GTE has a plug-in hybrid drive system, though it would be available in other power plants if produced. The 374-horsepower concept fastback has a top speed of 155 mph.
The Sport Coupe Concept GTE, a four-door fastback that was unveiled at an auto show in Geneva, Switzerland, could be made at Volkswagen's Chattanooga assembly plant.In Puebla, Mexico, VW announced plans Monday to make a three-row version of its compact Tiguan SUV. The company will invest $1 billion for that expansion and modernization of its production facilities, as well as tooling to produce auto parts at suppliers.
The SUV will be launched in 2017, according to the company.
Production capacity for this longer Tiguan will be 500 units per day. It will go to North and South America as well as other world markets excluding the European Union and China.
Karl Brauer, senior analyst at Kelley Blue Book, said VW sales in the U.S. have suffered in the past couple of years because of a lack of SUV offerings. Last year, VW sales fell 10 percent over 2013.
But Brauer noted the new SUVs that VW wants to build won't be available until at least the 2017 model year and the market is hot now.
"That's their biggest risk right now," he said. "The train has pulled away from the station."
VW's strategy of upgrading its production architecture, which started with the new Golf on the Modular Transverse Matrix (MQB) platform in Mexico, goes to the next step with the new Tiguan.
"Localization has become key to safeguarding our competitive position on the global market and manufacturing the Tiguan in Mexico will bring production closer to the U.S. market," said Michael Horn, Volkswagen Group of America's chief executive, in a statement.
He said the Tiquan production is "another proof point that Volkswagen is committed to further growth in the U.S. and North American markets."
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.