Volkswagen Chattanooga is boosting wages by 10% for production employees as the company expects assembly of an electric SUV to hit large numbers at the plant this fall, an official said Friday.
"The ramifications in Chattanooga are profound," said Scott Keogh, president and chief executive of Volkswagen Group of America, in a conference call with journalists as the factory ramps up production of the battery-powered vehicle.
The plant is slated to hire more workers to build the ID.4 SUV. The wage hike is for all non-salaried production and maintenance team members.
Keogh said the increase is "in light of inflation and the issue of employment availability, and it's the right thing to do."
Meanwhile, Volkswagen of America in 2021 posted the company's best year since 2013, with sales fueled by its growing fleet of SUVs, including the Chattanooga-built Atlas, the company reported.
Overall sales for Volkswagen of America climbed 15.1% in 2021 to 375,030 vehicles. Sales of the Atlas and Atlas Cross Sport SUVs rose 32.4% higher last year than in 2020, according to the company.
"It was a very strong year for us," Keogh said.
VW 2021 SALES
Vehicles built in Chattanooga, with change from 2020:
— Atlas: 72,384 vehicles, up 24.3%.
— Atlas Cross Sport: 43,303, up 49%.
— Passat: 24,396, up 6.2%.
Source: Volkswagen Group of America
Also, buyers last year purchased 16,742 ID.4 SUVs, a vehicle Keogh said is already coming off the assembly line in prototypes at the Chattanooga plant. Until this fall, the automaker is importing the ID.4 from Germany.
VW is investing $800 million in the Chattanooga plant to ready the factory for EV production. When VW made the announcement of the investment two years ago, the company also pledged to add 1,000 employees at the factory that already employed more than 4,000.
According to Volkswagen of America, SUVs in 2021 accounted for 73% of its sales.
"The transformation of our portfolio is bringing new customers to Volkswagen and validating a strategic shift that has been years in the making," Keogh said.
In addition, the company in 2021 started selling the Taos, a compact SUV made at its Puebla, Mexico, production plant.
Andrew Savvas, Volkswagen Group of America's new executive vice president and chief sales and marketing officer, said the aim is to maintain momentum gained in 2021.
"We're heading in the right direction," he said during the conference call. "It's making sure we continue to grow the business."
Keogh said VW has between 20,000 and 25,000 reservations for the ID.4.
"It's the most excitement on the [dealer] floors since 1998, when we brought the Beetle back," he said.
More EVs are on the way, the official said. He said there's "an aggressive ramp-up at the plant, which we can and will do for EVs."
The ID Buzz, an electric vehicle roughly based on the Microbus, is expected to be shown March 9, Keogh said. He said he didn't expect the vehicle would be made in Chattanooga and the U.S. version won't arrive until late 2023 or 2024.
Keogh said production of the Passat sedan in Chattanooga has ended, as earlier announced.
Contact Mike Pare at email@example.com or 423-757-6318. Follow him on Twitter @MikePareTFP.