Expect Tennessee to Become the continent's sixth-largest vehicle assembly region when production begins at Volkswagen Group of America Inc.'s new site in Chattanooga.

VW will spend $1 billion on a greenfield plant to further its goal of tripling VW's U.S. customer base in the next decade. Scheduled to launch production in 2011, the plant will provide direct employment to 2,000 people.

The move is a “clear sign of the Volkswagen Group's commitment to the North American consumer,” says VGA President and CEO Stefan Jacoby.

Says Volkswagen AG CEO Martin Winterkorn: “This plant represents a milestone in Volkswagen's growth strategy. We will be selling 800,000 Volkswagens in the U.S. by 2018, and this new site will play a key role.”

VW is mum on its Tennessee product plans other than to say the new plant will be home to a “new midsize sedan designed specifically for the North American market.”

That is how VW described the Passat CC Coupe, when it was unveiled at the 2008 Detroit auto show.

But there also have been rumblings about a car that would slot between the Passat and Jetta, in addition to buzz about excising the Routan minivan from the contract-assembly deal VW has with Chrysler LLC. Routan production is set to begin this fall at Chrysler's minivan plant in Windsor, ON, Canada.

Meanwhile, VW considers Chattanooga to be a beachhead, of sorts. The plant will help VW “become the biggest European car maker (in the U.S.),” Winterkorn says in a statement released after a meeting of the auto maker's board in Germany.

Through June, BMW AG holds that distinction by a wide margin. VW was third behind Daimler AG with just over 160,500 deliveries, which puts the auto maker on course to match its 2007 total of 324,079, according to Ward's data. VW's full-year 2007 results were flat compared with like-2006.

Production at Chattanooga is scheduled to begin in early 2011, with initial annual capacity set at 150,000 units.

VW Close to Decision on Site of New U.S. Assembly Plant
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