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Volkswagen Restarts U.S. Manufacturing

Volkswagen AG officially opened its $1-billion assembly plant in Chattanooga, TN today, returning to U.S. manufacturing after a hiatus of 23 years.

The Chattanooga facility has hired 2,000 workers to build a car designed specifically for U.S. consumers, a VW Passat midsize sedan that will compete with Toyota’s Camry and Ford’s Fusion.

The German automaker’s new facility, built on the site of a former armaments plant, is the focal point of Volkswagen’s plans for the U.S. market, where it has invested $4 billion. Counting recent investments in Mexico, where Volkswagen builds the Jetta compact, the figure rises to $5 billion.

“Volkswagen’s Chattanooga Operations LLC is the linchpin in the company’s plot to triple U.S. sales to 800,000 vehicles in 2018,” Bill Visnic, senior analyst at online auto research firm Edmunds.com, told Detroit News. “If VW intends to shoulder past Toyota to sit atop the automotive heap, that grand plan probably isn’t going to work if Chattanooga doesn’t work.”

Volkswagen, Europe’s largest automaker, closed its New Stanton, PA plant in 1988, after only 10 years of operation. Since then, VW has strengthened its position in Europe, where it sells cars under the VW, Seat, Skoda, Audi, Bentley and other brands, and has become a major player in China. In 2010, Volkswagen earned $9.42 billion. During the first quarter of 2011, VW sold 1.99 million vehicles. VW has said it wants to be No. 1 in 2018, selling 1 million vehicles by then in the United States, 800,000 VWs and 200,000 Audis.

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