DETROIT – Volkswagen’s move to shift production of its small Tiguan CUV to North America and make the model bigger for better market appeal could open the door to a new entry-level CUV for its U.S. lineup, executives here say.

The sub-Tiguan model would be based on the Golf and increase Volkswagen of America’s CUV lineup to four basic entries, including the flagship Touareg and upcoming CrossBlue midsize CUV.

The CrossBlue, set to debut as a 7-seater and to be built at VW’s Chattanooga, TN, plant beginning in 2016, also will spawn derivatives, likely including a model along the lines of its Cross Coupe GTE plug-in hybrid concept unveiled at the North American International Auto Show this week, which seats five and has a more sporty profile.

On Sunday, VW announced it would source the upcoming longer-wheelbase Tiguan in North America beginning in 2017. Although it didn’t specify a plant, the automaker’s operations in Puebla, Mexico, appear to be the likely site of production.

The new model will be slightly more than 158 ins. (4 m) in overall length, have a third-row seat and accommodate seven passengers. There also will be a coupe derivative of the new Tiguan, executives say.

“It’s clear that when segments are growing, there is space for different body types,” says Heinz-Jakob Neusser, head of product development for the Volkswagen brand.

VW isn’t saying what capacity is planned for the North American-built Tiguan, but VWA CEO Michael Horn says he expects the figure to be significant.

“If we look at the compact SUV market (in the U.S.), it is nearly 2.9 million (units) and growing to 3 million,” he says. “If you take the Passat market share of 4% (in the midsize-sedan segment) and the Jetta (compact-sedan segment) share at 7%, somewhere within this ballpark we have to conquer this share (with the Tiguan). That’s what we would be planning for.”

The Tiguan’s forthcoming increase in size will create room at the bottom of the VW lineup for a new smaller model. At the 2014 Geneva auto show, VW showed off the Golf-based T-ROC concept, an aggressively styled, 2-door CUV with a removable 2-piece roof that could form the basis for the new U.S. model.

“The next step we’re thinking about is a Golf SUV,” Neusser says. “It’s very early (to be talking about), but we are thinking about it. This is (something) that could fit in the U.S. market – but step-by-step. We can’t do everything simultaneously.”

It is unclear whether VW would build the Golf-based CUV in North America if the project is green-lighted. It’s another model that would fit at Puebla, where the Golf, Jetta and Beetle are built.

VW also has plans to produce small CUVs, also based on the Golf’s MQB architecture, at its Skoda operations in the Czech Republic, presenting another potential low-cost sourcing option for a sub-Tiguan model for the U.S.

“We have the advantage that because all these are built on the (MQB) modular toolkit, we have the possibility of building them in the same factories (as other cars),” Neusser says. “We can use a lot of common parts and get a lot of (economies) of scale (and offer) gasoline, diesel, plug-in hybrid, full hybrid (versions) – everything we want.”

Officials also confirm the newly unveiled midsize Cross Coupe GTE is a ready-for-production concept that easily could be added to the mix at Chattanooga.

“From the engineering side, it’s not a spaceship, it’s a realistic thing,” Neusser says. “We are now here at this exhibition this week to get (public reaction). If it fits, we can decide what happens.”

Lack of suitable and price-competitive CUVs is one reason Volkswagen-brand sales are lagging in the U.S., where the segment is the hottest growth sector. VW-brand deliveries last year fell 10.0% to 366,969 units in the U.S., where it is targeting sales of 800,000 vehicles annually by 2018.

This week, VW CEO Martin Winterkorn promised the “biggest SUV offensive in the (Volkswagen) brand’s history,” saying the segment was a big part of the automaker’s planned $7 billion investment in North America between now and 2019. That outlay includes launching CrossBlue production in Chattanooga, plus the addition of 200 engineers there to help develop vehicles for the U.S. market and shorten cycle times for key products from seven years currently to five years.

dzoia@wardsauto.com