Broadcasting from its "Mobile Life Campus" in Wolfsburg, Germany (and crowing about Germany's World Cup win last night), Volkswagen has just announced that its new "Midsize SUV" will be built at the company's Chattanooga, TN manufacturing facility. Further, the company says it will establish a new "National Research & Development and Planning Center" at the Tennessee campus.

Without divulging new details about the vehicle, VW Chairman Prof. Dr. Martin Winterkorn confirms that the seven-passenger utility vehicle, previewed by the CrossBlue Concept, will be coming to Chattanooga. Winterkorn called the upcoming family hauler a "true American car ... built by real Americans."

In total, VW expects to create some 2,000 jobs by way of its announced efforts, with more than $7 billion invested in the US and Mexico.

Certainly, the CrossBlue's progeny has been designed with the US customer in mind, a high-capacity crossover (despite VW's insistence in calling it an "SUV") built on the versatile MQB architecture that underpins all of the company's newest products.

A diesel-electric hybrid in concept form, there's still no word on what powertrains the production version might offer – save for VW hinting that the platform is versatile enough to take hybrid, 2.0T, V6 or some combination of power therein.

Production on the utility vehicle will commence at the end of 2016. By then, some $900 million will have been invested in the project, with some 538,000 square feet of floor space added to the production facility.

As for the new R&D center, Winterkorn explains that its primary function will be to speed up the response time in bringing relevant product to US costumers. More than 200 new engineers will call VW Chatttanooga home, helping to integrate customer feedback "expeditiously" into currently built models, as well as planned vehicles.

In total, VW expects to create some 2,000 jobs by way of its announced efforts, with more than $7 billion invested in the US and Mexico from 2014 through 2018. (Actually, Dr. Winterkorn said "7 billion euros" in his live speech, contrary to the $7 billion figure noted in the VW press release; we're reaching out to the company for clarification.)

Finally, with a nod to some of the labor struggles VW, the United Auto Workers and political forces within the state of Tennessee have undergone over the last year, the company has announced that Chairman of the Group Works Council, Bernd Osterloh, will be joining the board of directors for VW America. Osterloh vows to "uphold the interests of Volkswagen employees in Chattanooga."

Scroll down to read the full VW press release.
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NEW MIDSIZE SUV FROM VOLKSWAGEN TO BE PRODUCED IN CHATTANOOGA
Jul 14, 2014

Winterkorn: "This model will play a key role for Volkswagen's presence in North America"
Volkswagen Group of America to invest approximately $900 million in the project
Second model to be produced in Chattanooga, in addition to the US-built Passat, starting from the end of 2016
Approximately 2,000 additional jobs to be created
Establishment of a National Research & Development and Planning Center in Chattanooga
Group Works Council Chairman Osterloh to be named a member of the Board of Directors of Volkswagen Group of America
Wolfsburg, July 14, 2014 – Within the framework of its Strategy 2018 plan, the Volkswagen Group is expanding its industrial footprint in the US. The Board of Directors of Volkswagen Group of America has decided to award the production of the new midsize SUV to the Chattanooga plant in Tennessee. The Group will be investing a total of approximately US$900 million (€643 million) in the production of a newly developed, seven-passenger SUV, and creating 2,000 additional jobs in the US. About US$600 million (€432 million) will be invested in Tennessee.

"The United States of America is and will remain one of the most important markets for Volkswagen. Over the past few years, we have achieved a lot there. We are now launching the second phase of the Volkswagen campaign in the US. With the midsize SUV, the expansion of the Chattanooga plant and the new development center, the focus is on the wishes of the US customer. This is also a strong signal for the US as an industrial and automobile production location. The Volkswagen brand is going on the attack again in America," said Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg.

"The Chattanooga-built midsize SUV will allow us to fulfill the wishes of our dealer network, bringing new customers to our showrooms and additional growth for the brand," said Michael Horn, President and CEO Volkswagen Group of America. "We are eager to be entering this growing vehicle segment with a world-class, seven-passenger SUV from Volkswagen."

Apart from investing in the production of a new vehicle, the Chattanooga location is to receive a new, independent National Research & Development and Planning Center of the Volkswagen Group of America for project coordination in the North American market. The objective is to identify customers' feedback in the market and to integrate them more expeditiously into existing and planned vehicle models. This will lead to the creation of approximately 200 qualified engineers working in Chattanooga. This decision is another element in the investment program that the Volkswagen Group has launched in the region. From 2014 to 2018, the Volkswagen Group will be investing more than US$7 billion in the US and Mexico. It is Volkswagen's goal to deliver 800,000 vehicles in the US by 2018.

"Today is an exciting day not just for Chattanooga and Hamilton County but for all of Tennessee, and I want to thank Volkswagen for its significant long-term investment in our state," Governor Bill Haslam said. "The impact of this announcement goes far beyond the 2,000 new jobs because of the large multiplier effect of the automotive industry, and adding an additional manufacturing line and the National Research & Development and Planning Center sends a clear signal that Tennessee can compete with anyone in the global marketplace."

Christian Koch, CEO and Chairman of Volkswagen Group of America Chattanooga Operations, said: "We are proud to be making the new midsize SUV here. This is fantastic news for the plant and proof of the confidence placed in the workforce that does a great job here making high-quality cars every day."

At Chattanooga, the new SUV will be integrated into existing plant structures. Existing areas in production will be used for the assembly of the midsize SUV. A total floor space of 50,000 m² (approx. 538,000 sq ft) will be added to the existing production facility. The midsize SUV, which is based on the CrossBlue concept vehicle, was developed especially for the North American market. The CrossBlue made its global debut at the 2013 North American International Auto Show in Detroit.

Today, Volkswagen also announced that the Chairman of the Group Works Council of Volkswagen, Bernd Osterloh, will join the Board of Directors of Volkswagen Group of America, Inc. "We are pleased that Mr. Osterloh has declared his willingness to play a concentrated role in shaping our US strategy in the future. He will represent the views of the workforce. This is in line with the codetermination culture of Volkswagen, which is one of our key success factors," Prof. Dr. Winterkorn said.

Osterloh stated: "It is important for us that our colleagues in the U.S. know that we also care about the production site and the employment in Chattanooga. I am looking forward to my work on the Board. I am determined to uphold the interests of Volkswagen employees in Chattanooga. The North American market offers considerable opportunities; in my opinion, these have not been pursued with sufficient consistency in the past. With today's decision to produce the midsize SUV in the USA, we are taking a key step."

"Hamilton County is pleased to partner with Volkswagen as they create 2,000 new family-wage jobs which will also generate very positive economic ripple effects for residents throughout our community," said Hamilton County Mayor Jim Coppinger. "By working with Volkswagen to build on the tremendous success of their initial job creation project, we are establishing a foundation for continuing economic growth for years to come."

"Volkswagen is one of Chattanooga's largest and most valued employers. They have brought 12,400 living-wage jobs to our region, employed Chattanoogans and helped build our middle class. This expansion will result in a huge capital investment and thousands of new jobs," said Chattanooga Mayor Andy Berke. "From day one, the City and County have worked hard to see today become a reality, when we can announce that Volkswagen will be adding more jobs, more investment and expanding their presence in Chattanooga."

"This announcement is great for Chattanooga and great for Volkswagen," said Ron Harr, president & CEO of the Chattanooga Chamber. "Thanks to Volkswagen's expansion, we will have a much easier time recruiting additional automotive suppliers to help them build out their supply chain while also cementing Chattanooga as 'The Center of the Automotive South.'"


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  • 44 Comments
      no1bondfan
      • 5 Months Ago
      More US jobs - sounds good to me! Good choice VW.
        Edsel
        • 5 Months Ago
        @no1bondfan
        It is very good news. However, I often wonder how technology has improved manufacturing automation with respect to manpower used to produce a car - compared to 20 or 40 years ago.
          Skicat
          • 5 Months Ago
          @Edsel
          Exponentially. Visit any modern engine plant and almost no human hand is involved with assembly. The people are only there to feed the machine raw parts from the foundry, program the machines when job requirements change, and maintain/repair the machines. It's weird to walk around a factory where the manufacturing process goes on in row after row of automation. Auto assembly as a whole uses more humans, but not nearly as many as 3 decades ago. Paint and welding shops are almost 100% automated. I haven't been in a stamping plant for 25 years. Anybody know how much of that process is automated?
      Skicat
      • 5 Months Ago
      Can't imagine how those lazy, overpaid U.S. auto workers won out over the $5/hour Mexicans. /sarcasm/
        Kumar
        • 5 Months Ago
        @Skicat
        Our robots are better than their robots?
        1454
        • 5 Months Ago
        @Skicat
        You don't know what the true cost per employee/unit works out to. It could be very low currently in Tennessee. I know a global company I worked for had a lower costs per unit good sold at a particular US facility based on less rejected material(better low skill workers) and availability of raw materials(closer to suppliers) than their Chinese and other facilities. True cost per good sold isn't just labor costs, although that is usually a large part of it.
      pickles
      • 5 Months Ago
      When Volvo's first seven-passenger SUV is being replaced after TWELVE years -yet still before VW releases itheir first seven-passenger SUV, you know VW has its head in the sand. Nobody is more conservative than VW. In some ways I like that but it seems imprudent as part of a business plan.
      Dianne Cruz
      • 5 Months Ago
      If you are a Filipino, unemployed, want to have a job, visit http://www.unemployedpinoys.com
      Michael
      • 5 Months Ago
      Real Americans, as opposed to commie union workers.
      Carlos Cruz
      • 5 Months Ago
      I guess VW didn't learn from the quibble and political crossfire that came about after the Union vote in February. At this rate it shouldn't be long before the Chattanooga plant meets the same fait as the Westmoreland plant.
        churchmotor
        • 5 Months Ago
        @Carlos Cruz
        NO, the Chattanooga plant avoided letting the Detroit mafia in. The Detroit mafia killed the Westmoreland plant.
      PiCASSO
      • 5 Months Ago
      I thought I was looking at rebadged Jeep Grand Cherokee...
      carguy1701
      • 5 Months Ago
      Is somebody going to answer that phone, because I ******* called it! As for the unionization, this shouldn't come to anyone's surprise: unions (or rather, the Works Council) is VW's thing, always has been. That said, having the UAW come in was a bit of a shock to me, as I thought they'd simply call in IG Metall to set up shop on this continent. This would have given VW a known entity to work with AND had the added advantage of possibly lighting a fire under the UAW's ass to shape up (read: get rid of Bob King's cronies, adopt new thinking, etc.). That could still happen, though, as it sounds like the UAW is there at VW's invitation anyway, and invitations can be revoked. Plus, had this happened, my plans for a coup d'état in Cleveland could have proceeded unhindered.
        RocketRed
        • 5 Months Ago
        @carguy1701
        Some people say that that the whole plant vote brouhaha was a plot by VW to sideline the UAW and bringing in a kind of lite-Aufsichtsrat representation of the kind they have now put in. That seems tin-foily. But it certainly looks like VW was thrown in the briar patch: Now things simpler for VW, and avoids any trouble with IG Metal back home, who would not be pleased with seeing the U.S. plant go without representation. Now IG Metal even has their own guy in Herndon and doesn't have to liaise with anybody.
          carguy1701
          • 5 Months Ago
          @RocketRed
          Everybody wins. Except easily butthurt conservatives.
          carguy1701
          • 5 Months Ago
          @RocketRed
          Bwahahahaha. Keep it coming aaronm!
      Edsel
      • 5 Months Ago
      It needs sliding rear doors. Maybe Chrysler can help VW with that....
      Chumley
      • 5 Months Ago
      I think there's a market, but with production not starting until the end of 2016 and likely widespread availability well into 2017 it remains to be seen what the market will be almost 3 years from now. Alot can change.
      Jsinclair39
      • 5 Months Ago
      VW is heading in the wrong direction with this SUV. They should have made one many years ago. Now, they should be focused on bringing over what their good at....small cars! Bring us the Polo, the UP! and the Scriocco. Then make the VW Microbus that everyone still loves!
        no1bondfan
        • 5 Months Ago
        @Jsinclair39
        This is what people buy in the US. The Explorer, Highlander, and Acadia/Traverse/Enclave sell like hotcakes with big margins. You are right though - it should have been out years ago.
        RocketRed
        • 5 Months Ago
        @Jsinclair39
        You mean the small cars that have a 3-figure profit margin, possibly, in the U.S. and which you will not buy at any price? Mid to large SUVs are the heart of the U.S. market and the most profitable volume segment. The lack of such a car is a gaping hole in VW's line up in the U.S.. Hyundai has stormed the U.S. market in large part by moving every size of CUV---while VW has limped forward with the ancient, high-cost Toureg and Tiguan. The Routan was a desperate move to keep sedan buyers from going Korean after outgrowing their B6 Passats and Jetta Wagons. This is very long overdue for VW. And major kudos for putting a labor rep on the VWoA board.
      Wetstuff
      • 5 Months Ago
      Ya Ed.. that's some fugly looking Dodge something..
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