Volkswagen is setting out to build a plant in Chattanooga, Tennessee, where vehicle production will be due to commence in early 2011. The supervisory board of Volkswagen AG today approved the plans and an investment volume of up to 1 billion USD (around 620 million euro). The Group’s management board had previously pinpointed Chattanooga as the site for its new plant. “The USA market,” said Prof Martin Winterkorn, CEO of Volkswagen AG, “is an important part of our volume strategy and we are now very resolutely accessing that market. Volkswagen will be extremely active there.”

The first stage of construction is designed to provide annual capacity for the complete production of 150,000 automobiles, including body-production, paint-shop and assembly operations. A cutting-edge modular production system at the plant will enable maximum flexibility. The first vehicle to be manufactured there will be a new midsize sedan tailored specifically to the US market. Volkswagen itself will employ a staff of approximately 2,000 at the site over the medium term, while additional jobs will be created in the supplier and logistics sectors.

“This plant represents a milestone in Volkswagen’s growth strategy,” says Prof. Winterkorn. “We will be selling 800,000 Volkswagen p.a. in the USA by 2018, and this new site will play a key role.” Volkswagen says the plant will help to permanently alleviate exchange-rate fluctuations. “This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region.” That success apparently includes having customers in the US come to perceive the company as a domestic manufacturer.

Volkswagen originally short-listed 25 potential sites for its US plant. The management board chose Chattanooga because it outperforms (though only slightly) the next-best candidate sites in terms, most notably, of providing an existing infrastructure of components suppliers, of disposing over a qualified workforce and of the availability of around 550 hectares of developed property with direct transport connections. Prof. Winterkorn added: “We look forward to establishing an important mainstay for ourselves when we become the biggest European carmaker there.”