Volkswagen Sees Resurgence in U.S. Market

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Researched by Industrial Info Resources (Sugar Land, Texas)--Volkswagen AG (Wolfsburg, Germany) is the largest automaker in Europe and a force to be reckoned with in China, Brazil and other parts of the world. That stature, however, does not hold in the U.S., where in recent times Volkswagen has bordered on irrelevance. In a bid to attain the same level of recognition that it enjoys in other parts of the world, Volkswagen has mounted serious efforts in the U.S. to compete with the Japanese and Korean automakers that have almost obliterated it from the U.S. market.

Volkswagen Group of America Incorporated (VWGoA) (Herndon, Virginia), a subsidiary of Volkswagen AG, announced in 2008 plans to invest $1 billion to build a new automotive assembly plant in Chattanooga, Tennessee. Production at this facility, which has a 66-acre solar park with 33,000 solar panels and a capacity of 9.5 million watts, began in April 2011, with a capacity of 150,000 vehicles per year. The 1.9 million-square-foot plant, located on a 1,400-acre site, was designed by SSOE Group (Toledo, Ohio), with Alberici (St. Louis, Missouri) performing construction management.

Volkswagen announced plans in 2014 that it would produce a new, midsized sports utility vehicle (SUV) at the Chattanooga plant, with the vehicle playing a key role in the automaker's bid to recapture the U.S. market. The SUV was developed especially for the U.S. market.

"The Volkswagen brand is going on the attack again in America," said Martin Winterkorn, chairman of the Board of Management of Volkswagen Aktiengesellschaft.

In January, a 538,000-square-foot expansion, valued at $600 million, began at the Chattanooga facility, to be completed in fourth-quarter 2016. The scope of the project includes expansions to the body shop and assembly finish shop, and the installation of equipment. Project participants include SSOE Group, the construction management firm EMJ Corporation (Chattanooga, Tennessee), and Gray Construction Company (Lexington, Kentucky) as the general contractor.

Building cars in the U.S helps the automaker escape the high cost of labor in Germany, so it can better compete with the Toyota Camry and the Honda Accord, but aside from investing in the production of a new vehicle, the Chattanooga location is also receiving a new, independent National Research & Development and Planning Center for project coordination in the North American market. The objective is to identify customers' feedback in the market and integrate them more expeditiously into existing and planned vehicle models.

The automaker also is investing $20 million for an expansion of its warehouse at the Chattanooga facility.

The concerted efforts by Volkswagen in the U.S. to recapture some of the glory days of the 1960s and the iconic Beetle have not fallen on an unyielding market. The Volkswagen brand has had increased sales in recent years and lists one of its goals for 2018 as becoming the industry leader in customer satisfaction. The automaker agrees that this is a daunting goal, but believes it is feasible despite skepticism from industry experts.

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