Volkswagen's top official in America said Wednesday he is "more convinced than ever" the automaker made the right choice by picking Chattanooga for its U.S. assembly plant.

Stefan Jacoby, VW Group of America's chief executive, also said that, while the German automaker is cutting costs amid the global downturn, it's not backing away from the $1 billion plant.

"It's not a risk. It's an opportunity," he said at the Chattanooga Area Chamber of Commerce's Spirit of Innovation meeting.

Mr. Jacoby, who checked out the progress on the 1.9 million-square-foot plant before the meeting, said VW isn't immune from the auto slowdown.

"But we'll be ready for takeoff when the economy revives," he said.

The Hanover, Germany, native reaffirmed that VW plans eventually to double currently planned production at its Enterprise South industrial park plant.

"If the market demands, we will increase our capacity here," he said. "I'm pretty convinced that later, strategically, we'll increase capacity."

Matt Kisber, state commissioner of economic and community development, said officials from the beginning viewed VW as an opportunity that could grow, and Tennessee is ready to support it.

"They've got a strategy that, as it succeeds, the Chattanooga manufacturing plant will play an important role in that growth," he said.

Chattanooga Mayor Ron Littlefield said he and others anticipated a plan to expand the plant would be on the horizon. He noted that VW has reserved land to do so.

Diesel VWS


Concerning the Chattanooga plant, scheduled to starting producing a new midsize sedan in early 2011, Mr. Jacoby said he expects up to 30 percent of the vehicles will be diesel powered.

While Americans have been slow to accept diesel engines, "I think the perception of the American consumer toward diesel has improved significantly," he said.

Mr. Jacoby also said he supports a so-called "scrapping program" designed to help spur new vehicle sales in the United States. Such programs provide government cash vouchers to sway drivers of older cars to trade them in for new models that are more fuel efficient.

Mr. Jacoby said such initiatives could bolster the auto industry.

"More than half the cars here are 10 years old," the CEO said.

In VW's home country of Germany, an offer of about $3,290 for trade-ins helped boost February car sales by 21.5 percent from a year earlier, according to the German Association of the Automotive Industry.

A bill in the U.S. House of Representatives, sponsored by U.S. Rep. Betty Sutton, D-Ohio, would give those trading in an old car a $4,000 voucher that could be used to buy a new car that has a fuel efficiency rating of at least 27 miles per gallon. But her bill is restricted to cars assembled in North America.

VW, which is building a $1 billion plant in Chattanooga but doesn't now assemble cars in the United States, prefers a Senate plan that offers incentives to buy new cars regardless of where the car is made.

The Senate bill would give $4,500 for trading in a gas guzzler up to seven years old, $3,000 for cars that are eight to 10 years old and $2,500 for cars older than that.

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