VW in the US
May 25, 2011
When he christened the new one billion dollar plant, VW chairman Martin Winterkorn said the auto manufacturer's order books were full.
"This could be a record year for the company," he announced, adding that it was "proud to be part of this great car nation."
The Tennessee plant, which officially started production a few weeks ago, will produce a larger version of the European Passat, a long-standing part of VW's family vehicle repertoire.
Built on American soil and with 85 percent of components manufactured nationally, the new model is Volkswagen's chance to finally gain a foothold on the one major market which has so far proved elusive.
Speeding ahead
Winterkorn expects the new car and the Mexican-produced Jetta to boost US sales to around the 300,000 mark this year, increasing to almost treble that by 2018. That make up around six percent of the projected US market.
Automotive expert Stefan Bratzel of the University of Applied Sciences in Germany's Bergisch Gladbach says that like so many of Volkswagen's goals, this one is ambitious.
"It isn't going to be easy," he told Deutsche Welle. "The US market is not growing, which means VW will have to squeeze other manufacturers out, and in order to do that, they will have to accept a smaller profit."
The biggest hurdles for VW are General Motors and Ford, which are part of the fabric of the US, and both of which have responded to rising fuel prices by launching compact cars. The Korean group Hyundai/Kia is also much more popular in the US than Volkswagen.
But Winterkorn is optimistic about the move and is planning to stay for the long haul.
"The factory is planned so that we can expand without problems," he said, adding that it could be used to produce other VW models too.
Publicity stunts
This week's events to mark the opening of the Tennessee plant offered a taste of how far VW is willing to go in order to win over the US car-buying public.
On Monday night, Winterkorn pledged millions of dollars in funding to the New York Museum of Modern Art, and then attended a high-profile dinner with celebrities including Madonna and Yoko Ono.
The official inauguration was held on Tuesday in the presence of the US Transportation Secretary Ray LaHood.
Bratzel believes the right marketing strategy is an absolute must for Europe's largest automobile manufacturing group if it wants to take America by storm.
"Nobody knows VW in the states, so a good product is not enough, you need good product policies and good communication policies," he said. "And don't forget they have failed in the past."
If at first you don't succeed…
In 1988 Volkswagen closed its Pennsylvania plant, where it had begun manufacturing its Golf ten years earlier. The company then turned its attention to developing a profile in other markets, not least China. But its failure to capture the imagination of American consumers has long been something of a thorn in VW's side.
According to Bratzel the German carmaker has learned from its previous mistakes, not least that US and European drivers expect different things from their vehicles.
"VW didn't consider this," he said, adding that there were also some problems with safety. "They have been identified, but whether or not they have been addressed will become clear over the coming months and years."
Doing the right thing
With a new plant, new workers to train, and a whole new distribution network to get up and running, there is plenty of scope for glitches. But VW is determined to see its cars live up to their name and become the American "people's car", and is doing what it deems necessary to make that happen.
VW says that when Chattanooga is working at full capacity, it will employ 2,000 people. Another 10,000 jobs, it insists, will be created through parts manufacture. The plant is fitted out with the latest anti-carbon emissions technology and water efficiency will be boosted by rain water collection.
"They want to be make their mark and to be understood," Bratzel explained. "They want to be able to say to customers and politicians alike 'we are creating jobs, so you have no grounds to object to us.'"
Reporter: Tamsin Walker
Editor: Thomas Kohlmann