Volkswagen announced last year that it was building a new plant in the southern state of Tennessee for a new mid-size sedan that will be launched in the U.S. next year. The car is expected to be slightly larger than the Passat and is being designed to rival the Honda Accord and Toyota Camry.
However, production capacity at the plant is expected to top as much as 250,000 units annually, which means there is plenty of room to add another model line. After all, Volkswagen only managed to sell a total of 213,454 vehicles last year.
While there was some talk of Audi using some of the capacity for one of its SUV models, the more likely outcome would be Volkswagen using the plant for a compact car or SUV. There’s also a chance that Volkswagen will build a new engine plant at the Tennessee facility to supply the local plant as well as Volkswagen’s production facilities in Mexico.
Building more cars in the U.S. means Volkswagen will be able to avoid the negative effects of currency fluctuations as well as logistical costs. Most of the American-built vehicle components will be sourced locally. The new mid-size sedan will have about 63 percent local content and will rely on suppliers never used by Volkswagen before.
This well lead to lower vehicle manufacturing costs, with the savings hopefully passed onto consumers. For more information on the new mid-size sedan, check out our previous story by clicking here.
[Automotive News, sub req’d]