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VW's American-Made SUV Won't Be A Touareg

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2014 Volkswagen Touareg R-Line

2014 Volkswagen Touareg R-Line

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If Volkswagen decides to build a new crossover SUV in its Tennessee plant--a decision due in the next few weeks--the new ute likely won't be a replacement for the Touareg.

Speaking last week at the 2013 LA Auto Show, VW's U.S. chief Jonathan Browning confirmed that a decision on a three-row crossover still is due by the end of the year. Browning said, however, that the new crossover won't necessarily follow the pattern of the American-made Passat sedan, which replaced the European-market car in U.S. showrooms and carries the same name, though it's a different car entirely.

"The Touareg is kind of a different beast," he offered. "It's an executive SUV, not for moving a lot of kids around. It's really more about the mature family, empty nesters." With the minivan segment contracting, and with VW's Chrysler-built Routan minivan no longer in the lineup, the brand needs a seven-seat vehicle, but one in the SUV class, he said.

One strategy could keep the Touareg at the top of the lineup, with a larger crossover slotting beneath it, as Infiniti has done with the QX60 three-row and QX70 two-row utes.

"We're comfortable with the three-row being less expensive," he said.

No matter how it's slotted into the lineup, a new crossover is a must-have, Browning admitted.

"Do we need a three-row SUV? Absolutely," he said, expanding by saying VW needs to do the same in the compact to mid-size SUV segment--to make vehicles more aligned with American tastes and usage.

The aim is to source 70 percent of VW vehicles sold in North America from North America, Browning said, which means moving some Golf production from Germany to VW's vast Puebla, Mexico, facility, which can build 600,000 vehicles a year.

When it makes that move, VW will also source a new Jetta SportWagen for the U.S. from the Puebla plant. Currently, the Jetta sedan is built in Mexico, but wagons are built in Germany.

The long-term goal, Browning said, is to deepen VW's presence in four broad volume categories--compact car and crossover, mid-size car and crossover. That pointedly does not include a subcompact car: "The economics of vehicle that size don't work" for VW yet, he said.

VW doesn't have to expand production at Chattanooga to accommodate a new crossover either, Browning said. The Tennessee plant was built to accommodate two products, and its existing capacity of between 150,000 and 170,000 units a year could handle a second vehicle line, he added.

The new vehicles are eagerly awaited by VW dealers. VW sales have been stable while other brands have risen strongly this year. Tackling more established players in established segments will take time: Browning explained that VW is growing from a relatively small customer base, and pointed out that Passat sales since 2012 are almost entirely conquest sales from other brands.

"Camry and Accord have been installed in this market for decades," he said, and added that VW is on track to sell more than 350,000 vehicles in the U.S. for its second consecutive year.

Still, Volkswagen is watching while other brands are expanding quickly--brands like Subaru, which has traded spots on the sales charts with VW all year long. Subaru has passed the world's largest automaker in U.S. sales in many months in 2013; in October, VW sold 28,129 vehicles, down 18 percent, compared to Subaru's 34,483 vehicles.

Subaru has already sold 347,890 vehicles in 2013, a new record that could see the Japanese automaker pass 400,000 sales this year--a figure Subaru has been anticipating publicly since midsummer.

"Subaru can entertain themselves however they wish," Browning said.

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