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Volkswagen Brings Midsize SUV To Non-Unionized Chattanooga Plant; Production Starts 2016

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Production version of VW’s CrossBlue concept to be built in Chattanooga

Production version of VW’s CrossBlue concept to be built in Chattanooga

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At a press conference this morning, Volkswagen confirmed that it will produce a new, midsize SUV for the U.S. at its plant in Chattanooga. The announcement brings with it a multi-million dollar investment in Tennessee and thousands of new jobs, but will this new vehicle help VW reach its goal of becoming the world's largest automaker by 2018?

There weren't that many surprises included in today's announcement. For example, we knew that VW was bringing a new SUV to the U.S. -- heck, there are rumors that the company could add three more to its lineup in the hope of luring dollars from the pockets of ute-loving Americans.

We also had a very good hunch that the new SUV would be based on VW's CrossBlue concept. Though pre-production models have struck many as a bit bland, the CrossBlue's short, stocky silhouette feels less like the underwhelming TIguan and Routan and more in keeping with other SUVs and crossovers that have been popular in the U.S.

What we most definitely did not know, however, was where the new model would be built. That's because several months ago, VW workers in Chattanooga voted against unionization, which didn't sit well with the UAW or union officials at VW's German headquarters. Union heads claimed that politicians had unfairly influenced the vote by warning that VW would produce the SUV somewhere else if Chattanooga chose to unionize. The UAW mulled a lawsuit, and at least one labor leader vowed to block any expansion of the Chattanooga facility until workers there joined the union. 

Then in April, the UAW decided to back down. Did it do so because its chances of success were slim? Or did the UAW receive something in return for dropping its fight? We can't say for sure, but it'll be interesting to see how all this unfolds.

NEW CAR, NEW INVESTMENT

Volkswagen says that it will hire an additional 2,000 workers in Tennessee to build the new, seven-passenger SUV, and the company will invest a total of $900 million in the vehicle. Of that total, roughly $600 million will be invested in Tennessee.

Some of that money will be spent to expand the Chattanooga plant by about 538,000 square-feet. But the automaker is also getting serious about market research, building a new facility to determine the needs of American consumers. That's not a bad idea, considering that VW is the only automaker doing business in the U.S. to suffer double-digit year-over-year sales drops. (Figures for the first half of 2014 were 13.4 percent below 2013.)

Per the official press release:  

Apart from investing in the production of a new vehicle, the Chattanooga location is to receive a new, independent National Research & Development and Planning Center of the Volkswagen Group of America for project coordination in the North American market. The objective is to identify customers’ feedback in the market and to integrate them more expeditiously into existing and planned vehicle models. This will lead to the creation of approximately 200 qualified engineers working in Chattanooga.... From 2014 to 2018, the Volkswagen Group will be investing more than US$7 billion in the US and Mexico. It is Volkswagen’s goal to deliver 800,000 vehicles in the US by 2018.

That last goal won't be achieved without a good bit of work. It's about twice what the company currently sells under the VW brand.

Production of the new SUV should begin in the second half of 2016. Will it help VW dominate the world's auto markets as handily as its home country dominated the World Cup? Stay tuned.

For more details and analysis, check out our colleagues at Motor Authority.

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