Volkswagen to idle Chattanooga plant production for two weeks

Volkswagen to idle Chattanooga plant production for two weeks

As Passat sales drop, VW retools for more Atlas assembly

March 2nd, 2018 by Mike Pare in Local Regional News

Staff file photo by Erin O. Smith / Volkswagen employees rest for a moment as they await the next vehicle on the assembly line at the automaker's Chattanooga assembly plant.

Photo by Erin O. Smith

Passat sales slide

U.S. sales of the Chattanooga-made Passat have dropped as buyers move to SUVs and trucks. Below are February Passat sales since 2014:

› 2014: 6,997

› 2015: 6,309

› 2016: 4,380

› 2017: 6,114

› 2018: 3,036

Source: Volkswagen of America

Volkswagen's Chattanooga plant, reacting to slowing sales of its Passat sedan and higher demand for the Atlas SUV, will idle production for two weeks this spring, according to the automaker.

"It's not a secret the market is shifting from sedans and passenger cars to family-friendly SUVs," plant spokesman Keith King said. "It allows us to correct course a little bit."

The Chattanooga plant will have nonproduction periods on March 26-29 and April 2-5.

The plant will remain open the first week of nonproduction and the time will be used for training for hourly employees, according to VW.

King said that during the first week, plans are to do some retooling in the plant to boost production of the seven- seat, three-row Atlas.

"Part of it is general retooling, preventative maintenance and just retooling for potential new developments," he said.

The second week will be a mandatory shutdown of the factory.

Atlas sales rise

VW began sales of the Atlas SUV in May 2017. Below are sales for select months though February 2018:

› May 2017: 1,610

› August: 2,807

› September: 4,095

› November: 5,154

› February 2018: 4,766

Source: Volkswagen of America

Staff file photo by Erin O. Smith / Volkswagen employees work around vehicles moving down the assembly line at the company's Chattanooga production plant.

Staff file photo by Erin O. Smith /...

Photo by Erin O. Smith

On Thursday, Volkswagen of America reported that sales of the Chattanooga-made Passat in February were 3,036, off 50.3 percent from a year ago.

The falling Passat numbers come as Volkswagen of America sales overall were up 5.7 percent the first two months of the year, largely due to SUVs.

The company's Chattanooga-built midsize Atlas SUV posted sales last month of 4,766 units. There are no comparable numbers because the new Atlas wasn't sold last February. But February's Atlas sales were more than 10 percent higher than in January, figures show.

Also, sales of VW's all-new Tiguan compact SUV, which is made in Mexico, are outpacing even the Atlas. The 2018 new Tiguan reported sales in February of 7,486, according to the German automaker.

SUVs overall accounted for 54 percent of all Volkswagen of America sales last month, according to the company.

Top VW officials have talked publicly about the company's SUV offensive, and they've remarked about assembly of a potential new vehicle in Chattanooga such as a five-seat SUV.

There's also been discussion of electric vehicle production in Chattanooga in the future.

King said it's common in auto manufacturing to make adjustments as needed. He said he believes such non-production weeks have been put into place at the plant in the past, but he couldn't recall a specific time.

King said no one is being laid off at the plant that employs about 3,450 people.

"There's nothing like that at any time in the future as far as I'm aware," he said.

Karl Brauer, Kelley Blue Book's executive publisher, said VW is building awareness of the Atlas, the biggest vehicle it has ever built in America.

"There's room for higher volume there," he said.

Related Article

Volkswagen reports U.S. sales up 6 percent in February

Read more

The Passat is sitting on an aging platform, though VW has said it's slated to be redesigned for 2019.

Brauer said that while the redesign may inject some new life into the vehicle, sales of sedans across the auto industry are falling amid buyers' appetite for SUVs and trucks.

"The new normal for total sedan sales ... it will be lower," he said.

Brauer said VW officials know that a big turnaround of Passat sales isn't realistic. At the same time, he sees Passat production continuing because carmakers need such sedans "to be a player" in the market.

"It's an additional component to SUVs," he said.

While VW heads into the non-production weeks, however, there has been some nervousness among employees. In week one, VW has told hourly workers that they can use all their 2017 personal time off, use 2018 days, or take off excused without pay.

In week two, workers can exhaust comp days (salaried only) and 2017 personal time, use 2018 days, or take off excused without pay.

King said the company didn't want to comment on whether VW workers could seek unemployment benefits during the non-production weeks.

But the company said it plans to pay out its first-quarter performance bonus one week early on April 20 to reduce the burden on employees.

Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318.