Volkswagen Selects Tennessee for New Plant

Falling dollar plays role in automaker's move into the U.S.

Volkswagen said July 15 it has selected Chattanooga, Tenn., as the site for its first U.S. plant since it closed a Pennsylvania factory in 1988. The company will invest up to $1 billion in the plant that's slated to begin production in 2011, according to a statement released in Germany after a meeting of the group's supervisory board.

The U.S. market "is an important part of our volume strategy and we are now very resolutely accessing that market," said Volkswagen Chief Executive Martin Winterkorn in a statement.

"We will be selling 800,000 Volkswagen per year in the U.S. by 2018, and this new site will play a key role," Winterkorn forecast.

Volkswagen had been searching for the location of an assembly line to protect it from a relentless rise of the euro that has affected profits in North America.

The Volkswagen statement added that the automaker also wanted U.S. customers to perceive it as a domestic manufacturer.

The German auto giant already has a plant in Mexico, but it does not make enough cars to supply all of North America, where Volkswagen currently has a market share of around 2%.

The group wants to at least triple that figure within 10 years and said July 15 it would produce a new midsized sedan "tailored specifically to the U.S. market" at the new plant.

Volkswagen has already begun to restructure activities in the United States, which have posted losses for several years.

Copyright Agence France-Presse, 2008

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