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Volkswagen Building Engines in Mexico for Tennessee Sedan

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Volkswagen NMS design sketch

Volkswagen NMS design sketch

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Volkswagen's expanding again, this time with an engine plant in Mexico that one day will feed its North American factories with powertrains for at least two new sedans.

VW confirmed in a press release that the new plant in Silao, Mexico--not far from a GM factory that houses assemby for pickups and SUVs--will be up and running in 2013.

The German automaker confirms the plant will assemble engines to be used in products built in its Puebla, Mexico and Chattanooga, Tennessee, factories. That suggests a new range of four- and six-cylinder engines that could slot into the current Puebla-built Volkswagen Jetta as well as the upcoming mid-size sedan that will replace the Passat in the 2012 model year.

Yesterday, a VW executive confirmed as High Gear Media reported last year, that the current VW Passat would be pruned from the U.S. lineup after the 2010 model year. A concept based on the new "NMS" sedan will be shown at January's Detroit auto show, with sales of the new vehicle beginning later in 2011.

Volkswagen has a corporate goal across all its brands of selling one million vehicles each year in the U.S. by 2018.

The new engine plant will have a capacity of 330,000 units annually, will cost $550 million to build and will employ about 700 people.

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