Volkswagen is looking at producing a small car (similar to the Polo pictured above) at its Chattanooga, Tennessee plant alongside the upcoming New Midsize Sedan, set to replace the Passat when it debuts in 2011. The Chattanooga facility could also host a new engine plant as well.
The new U.S. plant is a vital factor in VW’s goal to move close to 1 million units in North America by 2018, as it will help significantly reduce the costs of producing vehicles for sale in North America. Volkswagen’s New Midsize Sedan will be cheaper and more suited to American tastes than the Passat. The Passat currently retails for about$27,000 while a comparable Accord can be had for under $20,000, thanks to an unfavorable euro-dollar exchange rate.
A new small car or SUV would help expand the product lineup, enabling VW to continue to move units while saving money on importing vehicles from Mexico or Europe.