CHATTANOOGA, Tenn. (AP) — Volkswagen is seeking to add to a planned expansion announced last year to produce a new sport utility vehicle in Tennessee.
The Chattanooga Times Free Press (http://bit.ly/1Ggptwe) reports documents show the automaker wants to add an additional 130,153 square feet to the original expansion, 25 percent more than first planned. The additional expansion will add about $18 million to the $900 million project.
VW plant spokesman Scott Wilson said the company has decided to increase the size of the body shop to accommodate future production needs. He said that doing that now will save money and give VW flexibility as it makes changes to the way it assembles vehicles.
VW is scheduled to go before a local industrial development board on Tuesday to seek permission for the new expansion proposal.
In addition to expanding the factory and adding about 2,000 new jobs, the German automaker has said it will set up a new research center that will employ about 200 engineers. The research facility will coordinate products for North America to quickly include customer feedback into planned and existing models, the company has said.
Production of the new SUV is scheduled to start at the end of 2016, giving VW an entry into an important segment of the U.S. market. With the new product, the German automaker hopes to reverse flagging VW sales in the United States, which are down about 9 percent for the year through March compared to 2014.
Akshay Anand, an analyst at Kelley Blue Book's KBB.com, said the vehicle "can't come soon enough, so it's good they're preparing appropriate production capacity for the vehicle."
"If the market is in a similar state next year, the SUV should sell well, as Volkswagen always puts out quality product," he said.
Information from: Chattanooga Times Free Press, http://www.timesfreepress.com