REPORT: VW chooses Mexican plant for new compact sedan

Volkswagen Jetta 2.5 Special Edition - Click above for hi-res image gallery
Adding a vote of confidence to Mexico's struggling auto industry, Volkswagen has announced that it will begin assembly of a new compact car (working title "New Compact Sedan") in the country next year.
The German automaker will invest about $1 billion in the program, with $400 million of the funds directed towards a new assembly line at its plant in Puebla. The facility currently produces Jetta and New Beetle models – in 2008, a record 450,000 units were produced with about 80 percent of the volume exported.
The news follows the report last year, when Volkswagen announced a $1 billion investment in Chattanooga, Tennessee, to begin production of a mid-size sedan for the North American market. With a capacity of 150,000 vehicles, the Chattanooga assembly plant is scheduled to open in 2011.
[Source: Automotive News, subs. req'd]






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Reader Comments (Page 1 of 2)
sonic763 4:39PM (7/22/2009)
Volkswagen. Mexicans wanted.
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Jorge 5:17PM (7/22/2009)
Every post in Autoblog with the words Mexico or Mexicans is like a magnet for stupid comments. Im Mexican and believe me, this only shows your lack of "superior education" if we suppouse you are from a 1st world country.
Chris 11:54PM (7/22/2009)
You are racist if you think for one second that it's not right to use the term "Mexicans" or "Mexico." Double standard.
montoym 9:49AM (7/23/2009)
There's a big difference betwen racist and oversensitive. Seems to me that you are completely misunderstanding the term racist.
Kumar 5:27PM (7/22/2009)
So will this be the Polo or the new one slotted in between the Passat and the Jetta?
Seems that the horrors of Jettas and Golfs of the past haven't yet visited the current generation. No reason to mess with a good thing if that's the case by switching to a different plant.
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inline6 5:02PM (7/22/2009)
VW's NCS and NMS programs are as idiotic as their efforts early this decade to push themselves upscale with the Passat W8, Touareg, and Phaeton.
Honda, Toyota, Ford, and GM are busting their backsides to commonize vehicle platforms across markets to increase economies of scale.
VW, in pursuit of its goal to be the biggest in the world, as well as sell 800k units in America annually, is, in a down market, going the opposite direction, fielding market-unique platforms. The only thing that could be worse is if they take all the brand equity built up by the Jetta and Passat names and throw them out the window for new names on these American-specific cars.
I'll bet you anything, if they do change names, they'll be alphanumerics. And witness the brand bungling they did with the Golf IV-Rabbit-Golf VI transition.
They also run the risk of ruining part of their (slightly premium) appeal by offering American-specific product, rather than cars with European characteristics. It's the latter that makes the current line "cool". If VW tries to be Toyota, they'll alienate their current customers, and won't give pull Toyota buyers from their cars because they won't have Toyota's reliability.
VW has massive Narcissism problems, and this latest push will not go well for them. When a company starts making volume its top goal over profitability (see: GM, Toyota), bad things happen - quality/reliability issues, mainly. And it's not like VW is coming from a position of strength there. Far from it.
If VW has its heart set on selling 800k units, they should start selling Skodas here to compete on price with the Koreans. The Skoda lineup is critically acclaimed. They're fairly reliable now, to boot.
But VW's "New Market" idea is nothing short of idiotic.
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Bman 8:41AM (7/23/2009)
Wow, wtf are you smoking? You've made one of the most bizarre series of comments i've yet to read on AB.
"VW, in pursuit of its goal to be the biggest in the world, as well as sell 800k units in America annually, is, in a down market, going the opposite direction, fielding market-unique platforms." SO you really think they are that inexperienced.
"VW has massive Narcissism problems, and this latest push will not go well for them." ...Narcissism problems- ROFL!
"They also run the risk of ruining part of their (slightly premium) appeal by offering American-specific product, rather than cars with European characteristics."
...so now they're purely American?
"VW's NCS and NMS programs are as idiotic as their efforts early this decade to push themselves upscale with the Passat W8, Touareg, and Phaeton."
...SO building a new compact sedan and new mid-size sedan is now "idiotic", where is the similarity to the cars you just mentioned!?
Truly idiotic comments here.
inline6 12:21PM (7/23/2009)
No Bman, you didn't think your post through, actually. You also haven't been following the news about this program.
See, VW is planning to replace the NA Jetta and Passat with their own NA-specific, unique platforms not related to the next-gen Euro Jetta and Passat. They're planning on making the cars bigger, wider, and softer to appeal more directly to "American tastes". That's what the NMS and NCS projects are all about. They'll probably shelve the names Passat and Jetta, too.
Meanwhile, Honda, Toyota, and Ford are hard at work commonizing their European and NA platforms to achieve better economies of scale. GM is already there.
Now, read my comments again.
If VW replaced the Jetta and Passat with the next-gen Euro Jetta and Passat, they'd keep their loyal customers, continue with the "Das Auto" European appeal, and they'd save money by selling more of the same cars.
The NMS/NCS plan they have in place now will seriously hurt profitability because they're dividing their volume among two different sets of parts and tooling - the most expensive parts of vehicle production. Not to mention that any intention VW has to out-Toyota Toyota will fail because VW STILL can't get their reliability right.
Read much?
http://www.autoblog.com/2007/09/17/vw-of-americas-plan-for-expansion-more-core-less-niche/
Bman 2:24PM (7/23/2009)
I think you need to rethink the agenda, whatever comes out of the NA plant will obviously not conclude the offerings from VW.
Maybe you can't read: With a billion dollar investment here and a billion there, sounds like somebody is making progress whether you like their product or not. How can you honestly knock that considering the economic conditions.
Again maybe you haven't been reading- The VAG group has been holding quite well during the big dip, therefore the need for "commonizing their European and NA platforms to achieve better economies of scale" is not the priority. Actually the old Mk4 Golf, Jetta, Beetle and Audi TT proves they were just doing that.
Way to post a link to a news flash from '07. Maybe you haven't been reading or living for that matter, but just a few things have changed since '07. And after unfortunatley reading your idiotic comments once again, you take leisure assuming many of the details. "They'll probably shelve the names Passat and Jetta, too." "Not to mention that any intention VW has to out-Toyota Toyota will fail because VW STILL can't get their reliability right." "They're planning on making the cars bigger, wider, and softer to appeal more directly to "American tastes" - Oh sure they'll start building Buicks now.
Go lay down.
inline6 3:39PM (7/23/2009)
Bman, the NMS/NCS plan is steaming ahead just as it was planned 2 years ago. The article above is evidence of that. As are the articles below:
http://www.autoblog.com/2008/10/31/vw-discusses-new-midsize-sedan-to-be-built-in-chattanooga/
http://www.autoblog.com/2009/02/12/first-sketch-emerges-of-volkswagens-new-mid-size-sedan-from-ten/
You're right...whether they change the names or not is speculative. However, they are building an NA-specific set of vehicles.
And I don't care whether or not they're weathering the economic storm well or not at present (with non NA-specific models, BTW), it's still an EXPENSIVE thing to design, tool, produce, and try to earn profit from two different vehicles in the same basic size segment.
They're throwing the advantage they currently have away, which is in large part responsible for their profitability, to go to a market-specific vehicle program that all the money-losing companies are ABANDONING because THEY'RE LOSING MONEY SELLING SEPARATE PLATFORMS FOR SEPARATE MARKETS.
We'll see how the actual products come out. They may be great and they may be popular. If they're designed to be NA-specific models, they'll probably be bigger, heavier, and softer than the current Euro models. Look at the Euro Accord vs. the American. Look at the Euro Avensis vs. the American Camry.
Logic dictates that VW sees the sales of the NA Accord and Camry and thinks the NMS will help VW get closer to their 800k annual NA goal than the Euro Passat would. But I have a hard time believing that they'll be too successful since:
1) The next-gen Accord and Camry will probably be a little smaller, lighter, and more fuel efficient because they share platforms with their Euro counterparts.
2) Accord and Camry owners are the most brand-loyal in the midsize segment, mostly because of their cars' quality/reliability reputations.
3) Those Accord/Camry owners who aren't brand-loyal won't have much reason to look at VW because VW doesn't have the reliability reputation. And it's not a perception problem: it's reality.
Regardless, THEY WON'T BE AS PROFITABLE as they would be selling the same product in Europe AND America, as they do now. Obviously, they think they'll sell enough NA-specific models to offset the extra costs incurred, but I'm skeptical.
Your Golf/Jetta/TT comment proves that you've misunderstood what I've said.
Yes, VW shares platforms between its models. That makes good business sense, and they do it well.
So why sell two Passats on two DIFFERENT platforms in two different countries? Everybody who does this is LOSING money. VW doesn't do it now and they're MAKING money. How much more clear can it be?
Bman 3:57PM (7/23/2009)
It's obvious you seem to think you understand VW's marketing approach better than VW themselves and are suggesting you know more than they do when it comes to cross-branding.
And you're sure that your opinion is the correct one and they will undoubtedly fail.
If that's not narcissistic, then yes- i'm misunderstanding you in every way.
inline6 5:03PM (7/23/2009)
Good grief, Bman!
I may be wrong. It is my opinion and not fact. But yes, I believe in MY OWN OPINION. That's why it's my opinion. That's not Narcissism, my friend.
Care to actually rebut it, rather than simply calling it idiotic, or that I don't know as much as VW's marketing department?
OBVIOUSLY VW's marketing department is to be trusted...they sold SO MANY Routans, Eoses, Rabbits, Phaetons, and Passat W8s, after all! They were so smart, they tried competing with Audi - with their own luxury brand, earlier this decade. I mean, seriously, VW should be beyond second-guessing!
How silly of me to question them! It's not like anyone rightfully questions GM's marketing decisions, either.
Seriously, I'm curious. I've provided reasons why I think their decision is a bad one. Provide me reasons you disagree other than "VW marketing is smarter than you are".
I'm interested to see why you think VW will succeed where Toyota and Honda have failed in this regard.
Ian 5:04PM (7/22/2009)
Ugh... cars from the Puebla plant have historically been the WORST VW'S BUILT. I've owned 30+ VW's in the past 15 years or so.
The ones from Wolfsburg have been near FLAWLESS. The ones from South America, have been decent, not a lot of problems. The ones from Mexico have been TRASH. Constant problems. Electrical problems, and build quality problems with creaks, missing clips on interior pieces, etc.
I know I'm only 1 person, but 30 vehicles isn't a terribly small sample size to make an assumption based on what I see. Are the Puebla workers lazier, or less educated, or less motivated than their Brazilian and German counterparts? Who can really say.
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Adrian 5:23PM (7/22/2009)
You are wrong if you see making this Jetta / Bora most is made by robots, production depends only on the supervision that is given to a few parts to be made by people.
We have a much better quality than they have in Brazil where VW is also produced.
For example the Nissan plant here has the highest recycling rate and sets an example for plants anywhere in the world.
GM is shipping here in the best qualified and the production of new models seem to be made in them.
And if you purchased 30 vehicles, poorly made, just make me think you're a liar or a stupid
Kumar 5:32PM (7/22/2009)
"Are the Puebla workers lazier, or less educated, or less motivated"
Congrats on going down the laundry list of stereotypes.
Ian 6:03PM (7/22/2009)
I can't comment on the abilities of the Mexican workers, what I can say is that the plants in Mexico are generally not as automated as they are in the States or Europe. Because the wages are so low its cheaper to employ people than purchase robots.
Its also IMHO a fundamental flaw with building vehicles in Mexico for sale in the States regardless of the manufacturer. Ford created a market for his Model T by paying his workers enough that they could afford the product they made. Therefore creating a market.
With GM etc closing US plants and moving production to "low cost" countries and others like VW going straight there while the US unemployment rate soars, who's going to be able to afford these vehicles.
Ian 6:05PM (7/22/2009)
@Adrian:
I never said I bought 30 NEW VWs. Just 30 of them. I'm an enthusiast and as of right now I own a 2002 GTI 1.8T, a 1980 Scirocco, a 1995 Jetta VR6, and a 1990 Corrado G60. I've also owned enough to know that my 2 mk4 GTIs from Brazil had far less problems than the 3 mk4 Jettas I've owned that were Puebla built. And yes, robots do the welding and body assembly, but someone still puts the seats in, finishes the dash trim by hand etc, otherwise it wouldn't be cost advantageous to build them in Mexico as opposed to the US or anywhere else. I get the sense you are from Mexico and that I hurt your feelings with my post, thats not my intention. I'm just stating that the Mexican made VW's I've owned have been of lower quality than the Brazillian and German ones.
@Kumar:
And congrats to you on taking what I posted out of context. I was asking a question and if you read the next few words, it says 'Who can really tell'.
Ian 6:08PM (7/22/2009)
PS the 3rd post is a different 'Ian'. 2 different people with the same name. I posted the original post and the 4th post with the rebuttals.
Jorge 5:19PM (7/22/2009)
I think this points to the user, more than the manufacturer. One is ok, two is a coincidence, ¿but 30+?!!!
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Jorge 5:23PM (7/22/2009)
The quality controls and standards come from Germany. Is not like they built VWs here in Mexico with aztec and mayan technology!!!