Volkswagen Cultivates Tennessee Investment

Chattanooga, Tenn., may be the center of Volkswagen’s U.S. manufacturing strength, but the German automaker is also invested elsewhere in the Volunteer State.

In March 2012 Auto Trends reported that Volkswagen had announced plans to open a new distribution facility in Roane County, Tenn., some 90 minutes northeast of Chattanooga. That approximate 460,000 square-foot facility opened on June 25, 2013, a $40 million investment that is expected to bring dozens of jobs to the area by 2016.

Volkswagen CrossBlue Tennessee

Will Volkswagen give its CrossBlue a production go?


Volkswagen Chattanooga, Tennessee

Volkswagen’s Chattanooga plant, however, is by far the largest contributor of VW jobs in Tennessee, with 12,400 full-time positions at Volkswagen, with its suppliers and all across the state’s economy. That is one of the findings of a University of Tennessee at Knoxville research study that also shows the company is responsible for $643.1 million in annual income and has contributed $53.5 million annually in local and state tax revenue.

Directly, Volkswagen has created 2,415 jobs and 9.985 jobs indirectly through its supply base and other companies. Volkswagen says that 17 automotive supply companies have set up shop in Tennessee to support its plant.

Volkswagen CrossBlue Coupe

The Chattanooga plant is tasked with building just one model: the midsize Volkswagen Passat sedan. That model is Volkswagen’s second most popular one (Jetta is No. 1) and will soon fill out Chattanooga’s current 150,000 per year build capacity. No other model is built there at present, but the company is expected to announce a major expansion to its $1 billion facility to allow for a second one. That announcement may come as early as Fall 2013.

That second model will most likely be based on the Volkswagen CrossBlue Concept SUV, a vehicle that made its debut at the 2013 North American International Auto Show in Detroit this Jan. That vehicle is a six- to seven-passenger crossover that would slot between the Tiguan and Touareg, filling an important gap in Volkswagen’s U.S. line up.

Unlike most hybrids, the CrossBlue would feature both diesel and electric power sources, with a pair of electric motors — one in the front and one in the back — supplementing the diesel engine to deliver a net 305 horsepower and 516 foot-pounds of torque. When operating in diesel mode this model should average 35 mpg, reaching 89 mpge in electric-only mode.

Number One Automaker

Volkswagen has not confirmed that the CrossBlue has been green-lighted for production nor has it identified the model it would add to Chattanooga. The CrossBlue would most likely be a niche model, at least from the outset, with perhaps fewer than 20,000 units sold annually. That means Volkswagen could limit the plant’s expansion to cover projected demand or simply double the plant’s capacity to anticipate increased product build and demand going forward.

It is no secret that Volkswagen desires to assume the mantle of most prolific automotive producer by 2018, a goal that might be reached as early as this year. Chattanooga is playing a small, but important part in helping Volkswagen reach its goal, while also underscoring to American consumers that its Tennessee investment is a sure one.

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Photo courtesy of Volkswagen of America.

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