VW raises pay 10% at Tennessee plant

Volkswagen is giving workers at its assembly plant in Chattanooga, Tenn., a 10% pay raise as the covid-19 omicron variant stretches an already-tight labor market, the head of its U.S. business said.

The German automaker on Friday reported U.S. sales of 375,030 vehicles for 2021, a 15% jump from the previous year. The performance was led by the Atlas, its three-row SUV made in Chattanooga, and the Tiguan midsize SUV. VW delivered 16,742 units of its electric ID.4 SUV, which it plans to begin building in Chattanooga in the second half of 2022.

Across the industry, U.S. auto sales will likely be stuck at 15.5 million this year because of tight supplies of semiconductor chips, Scott Keogh, chief executive officer of VW’s U.S. unit, said on a call with reporters Friday. At the same time, the auto industry is grappling with higher rates of absenteeism because of the spread of the virus.

“Will there be challenges in the ecosystem of suppliers and factory with absenteeism caused by omicron? 100%,” Keogh said. “But if you have more chips, you will gain share, and if you gain share, you’ll gain competitive advantage.”

VW’s Chattanooga plant has been closed for the holidays and because of chip shortages, but it will resume production Monday. It’s not running at full capacity because of chip scarcity, though Keogh expects to hit internal sales forecasts.

Volkswagen will reveal the European version of the I.D.Buzz, an electric iteration of its iconic hippie-era microbus, on March 9. A three-row version of that vehicle won’t come to the U.S. until 2023 or 2024, and it will be imported, Keogh said.