One of the problems with being an import car maker at the lower end of the automotive market is an increased sensitivity to currency exchange rate fluctuations. This is particularly problematic if the carmaker doesn't have a government willing to make currency adjustments the way Japan regularly does. Thus, Volkswagen has had a troubled manufacturing history with the U.S. for the last three decades.

As a response to currency issues, Volkswagen was the first import maker to set up a transplant operation in Pennsylvania in 1978, several years before Honda started building Accords in Ohio. Ten years later the plant closed as demand for the Golf hatchbacks it built dwindled. In recent years, as the U.S. dollar has continued to shrivel compared to the Euro, VW profits have been hit again and so they are taking another look at building in the U.S. CEO Martin Winterkorn told German magazine Focus they are looking at a U.S. manufacturing plant if the dollar remains weak. Given the unlikely scenario of the dollar rising anytime soon, states may be sending in their bribe incentive packages now.

[Source: Detroit News]




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