Volkswagen Plans Site Expansion for Tennessee Facility
Volkswagen’s assembly facility in Tennessee will get a double-boost as the German automaker has said it will increase the scope of a previously-announced site expansion plan for its Chattanooga plant.
The global company says it will add an additional 130,000 square feet to the original expansion—25 percent more than first planned—to gear up for the assembly of a new SUV, scheduled to start production at the end of 2016. The additional expansion will boost the cost of the $900-million project by about $20 million. Construction of the project’s first phase began in January.
“Taking this action now saves money while giving us flexibility,” says a company spokesman. “This decision extends the already-under-construction building a bit further out.”
The decision has raised eyebrows in the auto industry as VW has seen a sharp decline in U.S. sales. Its March sales dropped 18 percent to 30,025 vehicles from the same period a year earlier, a 9.3 percent year-to-date drop through the end of last month.
In addition to expanding the assembly plant, the German automaker has said it will set up a new research center to meld customer feedback into planned and existing vehicle models for the North American market. Last month, VW said it would invest $1 billion in a major expansion of its Puebla, Mexico site to build a new and longer version of its Tiguan SUV for the U.S. market, which should go into production next year.