DETROIT – A year after unveiling its CrossBlue midsize cross/utility vehicle concept at the auto show here, Volkswagen CEO Martin Winterkorn returns to Detroit with the long-awaited green light to build the vehicle.

The midsize CUV, a vital piece if the automaker is to achieve its target of 800,000 VW-brand vehicle sales in the U.S. annually within the next five years, “is on its way,” Winterkorn declares at a media reception on the eve of the first press day of the North American International Auto Show.

“Engineering already has started,” he adds, saying the unnamed 7-passenger production model will hit the U.S. market in 2016.

VW’s Chattanooga, TN, plant, which has plenty of room for expansion, remains the frontrunner to build the CUV. But the facility currently is the focus of a United Auto Workers union organization drive that could have the automaker hesitant to pull the trigger on sourcing for the new model.

Like the Tennessee-built Passat, the new CUV will be based on VW’s high-volume MQB platform.

Michael Horn, named the head of Volkswagen of America in December, replacing Jonathan Browning, who has left the company, tells WardsAuto a sourcing decision will be made regarding the new CUV in the next two weeks. He says the automaker still is studying financial factors related to plant sourcing.

If not Chattanooga, one of the Volkswagen Group’s Mexican facilities likely would get the program to build the CUV, which will be sold in other markets but is aimed primarily at the U.S.

VW still has not decided on a name for the production model, Horn says, adding he has seen the upcoming CUV and “it is great. I’m very happy Mr. Winterkorn made the announcement it will be (built) for 2016.”

Winterkorn says the decision to build the midsize CUV is a sign the automaker is not backing down from its target to sell 1 million Volkswagen and Audi vehicles annually beginning in 2018, despite a step back in 2013 that saw VW-brand sales fall 6.9% in a market that gained 7.5% overall..

“We are taking up the challenge – with confidence, total commitment and necessary staying power,” he says.

Winterkorn reiterates plans to invest $7 billion in North America over the next five years, adding the VW brand remains at the heart of the automaker’s North American growth strategy. “Today, Volkswagen is better positioned in the U.S. than ever before.”

The U.S. is a cornerstone in the worldwide growth strategy for the automaker, which saw the company sell a record 9.7 million vehicles last year, he says.

“So our strategy is to stay the course worldwide and here in North America,” Winterkorn says, adding, “America is the world’s toughest automobile market. It’s true if you make it here you’ll make it anywhere.”