CHATTANOOGA, Tenn. — Volks wagen picked Chattanooga for its U.S. assembly plant that will employ about 2,000 workers and make a new midsize sedan as part of a plan to triple sales in the U.S. by 2018.
Sites in Alabama and Michigan also were considered by Europe’s biggest automaker, which plans to invest about $1 billion in the plant.
The announcement came on a day that the euro soared to a new high against the dollar and General Motors executives in Detroit announced planned layoffs. It also comes about 20 years after VW closed its last U.S. plant.
Volkswagen has said the surging euro pushed along plans for a production facility in the U.S. The euro’s rise has made goods exported from Germany more expensive in the U.S.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said the strong euro dictated Volkswagen’s timing. He said making a mid-priced vehicle in Europe “can’t be viable.”
“They had to come here,” Cole said. “It’s a very competitive market. If you are going to do anything with that market you have to be here.”
Stefan Jacoby, president and chief executive of Volkswagen Group of America, received several standing ovations as he told Gov. Phil Bredesen and hundreds of people at a news conference that VW picked Chattanooga for the plant.
Jacoby said the company’s selection of Chattanooga is part of a strategy aimed at “connecting more with U.S. customers.” Volkswagen said the new sedan will be designed specifically for the North American consumer.
VW picked Tennessee 25 years after Nissan became the first foreign automaker in the South at Smyrna, a Nashville suburb.
The 1,350-acre site at Enterprise South Industrial Park near Interstates 75 and 24 between Nashville and Atlanta has long been seeking an auto assembly plant.
Chattanooga previously lost out on the $1.3 billion Toyota Motor Corp. plant that is being built near Tupelo, Miss., and the $1.2 billion Kia plant that went to West Point, Ga.
“I know this announcement has been a long time coming,” Jacoby told the Chattanooga audience.
Volkswagen executives said the new plant in the U.S., in addition to factories in India and Russia, is part of the company’s strategy to become the world’s No. 2 automaker.
