By Dow Jones Business News,
January 12, 2014, 09:40:00 PM EDT
By Neal E. Boudette
DETROIT-- Volkswagen AG plans to invest $7 billion in North America over the next five years, in a bid to
accelerate its growth in the region and catch up to key competitors like General Motors Co., Ford Motor Co. and Toyota
The German auto maker said it intends to use the money to build a new plant in the region although a location
hasn't yet been chosen.
"We have not made that decision in the supervisory board," Volkswagen's chief executive, Martin Winterkorn, said.
The company also reiterated its goal of boosting it sales of VW-branded vehicles in the U.S. market to 1 million
cars a year by 2018. Its VW brand had been growing rapidly in the U.S., but it stumbled in 2013, when sales declined
despite a rise in the overall U.S. market.
Despite the decline, VW still sold more than 400,000 vehicles in the U.S. in 2013. Volkswagen'sAudi unit also sold
more than 150,000 cars in the U.S. last year.
"The U.S. is a cornerstone of our 2018 strategy," said Mr. Winterkorn.
Part of the Volkswagen investment will go toward producing a midsize sport -- utility vehicle, a model now absent
from the VW brand lineup.
"We really need that vehicle," said Jeff Williams, owner of Williams auto world, a Volkswagen--Audi--Subaru
dealership in East Lansing, Michigan. "That is a big, big segment and we have to be competitive there."
Mr. Williams noted that the Q5 midsize SUV is a top-selling model for his Audi franchise, and the Forester and
Outback SUVs are top sellers for his Subaru store.
Volkswagen opened a plant Chattanooga, Tenn., in 2011, but hasn't yet been able to use all of the plant's capacity,
in part because of its sales slump in 2013.
In the past, the company has said it has space at the Chattanooga location to build a second plant.
In the last five years Volkswagen has been trying to increase its share of the U.S. market and expand production
here. In the past it sold mainly German-made cars exported to the U.S., but it has been hurt by unfavorable exchange
rates that make German-made cars more expensive in U.S. dollars.
It has a plant in Mexico that will begin producing the new 2015 Golf compact this week, and is building a second
plant in Mexico. With yet another plant coming as a result of its $7 billion investment plan, it will eventually have
four plants in North America--enough to produce roughly one million vehicles a year.
Write to Neal E. Boudette at firstname.lastname@example.org
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