Volkswagen Breaks Ground For Tennessee Factory

Volkswagen AG, the German automaker who is on a quest to become the world's largest car company, recently broke ground on its first American assembly plant in thirty years. Located near Chattanooga, Tennessee, the new plant will produce as many as 150,000 mid-size cars annually when production begins in 2011 signaling the company's renewed commitment to the US market. Volkswagen had previously operated a plant in Pennsylvania, a facility the company closed in the late 1980s.

Erecting The First Wall

Volkswagen marked the occasion not by digging up dirt, rather by erecting a wall which symbolizes the automakers commitment to the area, and the start of construction for the assembly plant. Located on 1580 acres, the assembly plant will be joined by a paint shop, body shop and business offices.

The automaker says that it will invest $1 billion in the plant and employ 2,000 people directly. As a result of its investment, an independent study estimated the overall impact of the plant will generate an additional $12 billion in income growth and more than 9,500 indirect jobs over the life of the project. This is good news for Chattanooga which has experienced its own share of recession woes over the past year.

An All New Mid-Size Model

The model being planned for the Chattanooga facility hasn't been announced, but VW has said that it will be a mid-size sedan developed specifically for the American market. This means that the car could share its platform with an existing model such as the Jetta, but have an entirely different body design. Volkswagen wants to launch a car that is better positioned to compete in the ultra-competitive mid-size car market, hence the specialty model poised to battle the Toyota Camry, Honda Accord, Chevy Malibu and Ford Fusion, the current leaders in this segment.

In 2008, Volkswagen announced its strategy for the US market. By 2018, the automaker wants to triple its sales in America, which includes sales of other models sold here by Audi, its luxury car division. That quest looked overly optimistic when it was first announced, but given the collapse of Chrysler and retreat of General Motors, VW's goal could be attainable. Audi doesn't build a car in the states right now, but with factory space becoming available, Volkswagen could make a purchase and get a plant up and running quickly.

Volkswagen is currently the third largest automaker in the world, but is expected to pass GM in sales this year, perhaps overtaking Toyota in 2010.