Volkswagen hopes for boost from SUV

  • Article by: AARON M. KESSLER , New York Times
  • Updated: July 14, 2014 - 9:41 PM

Automaker will add 2,000 jobs at its Tennessee plant.

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Workers assembled Passat sedans at the Volkswagen plant in Chattanooga, Tenn. VW will increase production there to make a midsize sport-utility vehicle targeted at U.S. consumers.

Photo: Erik Schelzig • Associated Press,

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After more than a year of slumping sales in the United States, Volkswagen on Monday made a move to revive its fortunes with the announcement that it will build a new sport-utility vehicle and add 2,000 jobs at its plant in Chattanooga, Tenn.

VW opened the factory, its first in the United States, with fanfare in 2011, part of an aggressive strategy to sell at least 800,000 vehicles domestically by 2018 as it sought to become the world’s biggest automaker.

At first, the strategy seemed to pay off, as the Passat’s sales soared. But since then, VW has cooled, with sales down 13 percent through June even as the overall vehicle market has risen 4 percent.

Now, to reach its lofty goals, VW will increase production in Chattanooga to make a midsize sport-utility vehicle targeted at U.S. consumers.

“This vehicle will be a true American car,” VW’s chairman, Martin Winterkorn, said at a news conference in Wolfsburg, Germany. “Big, attractive and with lots of high tech on board.”

The announcement comes after the United Auto Workers targeted the Chattanooga plant to organize the workers but encountered fierce opposition from political leaders who said the unionization drive jeopardized their efforts to woo the new production line. The new vehicle will be ready by 2016.

VW will also open a new research and development center in Chattanooga. The company said it is investing $600 million in Tennessee through 2016.

Michelle Krebs, senior analyst for AutoTrader.com, said VW needed to “beef up its portfolio” if it wanted any chance of doubling its sales by 2018. “This investment likely will address one of the glaring holes, an entry in the fastest-growing vehicle segment of small crossovers,” she said.

Tennessee politicians had said that state incentives for the plant’s expansion would be at risk if workers voted to unionize, drawing accusations from the UAW of improper outside interference. In February, workers at the Chattanooga plant narrowly voted 712-626 against joining the UAW.

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