Released today from Automotive News
VW plans engine, transmission plants
North American plants will feed U.S. assembly operation
Rick Kranz
Automotive News
January 23, 2008 - 1:28 pm ET
DETROIT -- Volkswagen will have engine and transmission assembly plants in North America to support a new vehicle assembly plant the automaker is expected to build in North Carolina.
The assembly plant could be operational in 2010.
" We'll make an announcement within six months" about the location of the plant, Stefan Jacoby, CEO of Volkswagen Group of America Inc., told the Automotive News World Congress today. After that announcement, the first vehicles could appear in " a little bit more than three years," he said.
Jacoby said the engine and transmission plants do not have to be near the assembly plant, saying Mexico and Canada are options. But " if we don't localize the plants" in North America, he said, " we can't be competitive."
Generally speaking, an engine and transmission account for about one-third of a vehicle's cost.
Jacoby refused to confirm an Automotive News story that the automaker purchased or had an option to purchase land in Rocky Mount, N.C., east of Raleigh and Durham.
Said Jacoby: " There has been a lot of speculation on this front, including the silly rumor that I've been traveling the Carolina countryside with a bunch of Germans purchasing land. That is not true.
" We need to build the right vehicle, at the right price, in the right plant, within the right supplier corridor, at the right time. A decision on local production will come in six months."
The assembly strategy is part of VW's plan to sell 800,000 vehicles annually in the United States by 2018. VW refers to its " Five Pillars" plan to reach that target. The five pillars refer to:
-- Redesigned vehicles and a wider product line for the United States.
-- A new advertising campaign to reposition the brand.
-- Improving the dealer network.
-- Streamlining the VW organization.
-- Evaluating U.S. production.
In other comments, Jacoby said:
-- " We need to offer a portfolio of technology," to meet U.S. fuel economy regulations. " It will include hybrids, electric vehicles. The main pillar will be diesel. It will be lighter vehicles and, of course, this country has to get used to smaller vehicles. They could be an alternative."
-- It was a mistake to end Phaeton sales in the United States. " We are thinking of relaunching the Phaeton, which is difficult in this market. I think Volkswagen is so good at brands that we can offer models in the volume segment and also in the luxury segment. It is a state-of-the-art car, and I think this car will fit very well in this market."
-- The VW brand has a sufficient number of U.S. dealers to handle sales volume of 350,000 to 400,000 vehicles. When the brand reaches that total, additional dealers will be added. Last year, VW sold 230,572 vehicles. In the meantime, Jacoby said, VW is concentrating on improving and strengthening the quality of its dealer network.
-- The Chrysler-engineered VW minivan will debut at the Chicago Auto Show.
-- Although VW once sold a pickup in the United States, a pickup will not be needed to reach VW's 800,000-unit U.S. target.
