Chat­tanooga to take cen­ter stage for VW at auto show

Chattanooga Times Free Press - - FRONT PAGE - BY MIKE PARE STAFF WRITER

DETROIT — Chat­tanooga will take cen­ter stage at the auto show here Mon­day with the un­veil­ing of the new­est Volk­swa­gen Pas­sat sedan and the po­ten­tial for elec­tric vehicle pro­duc­tion in the city.

VW’s re­designed Pas­sat, its big­gest makeover since assembly started in Chat­tanooga in 2011, will show the au­tomaker’s com­mit­ment to tap the sedan mar­ket even as some com­pa­nies shift from mak­ing cars in fa­vor of more SUVs and trucks.

The de­par­ture by some car­mak­ers opens the door for more Pas­sat sedan sales, said Matt DeLorenzo, Kel­ley Blue Book’s se­nior manag­ing edi­tor.

“With fewer com­peti­tors in the [sedan] mar­ket, it pen­cils out for Volk­swa­gen to stay put,” he said.

Even more key for VW is the mas­sive in­vest­ment the Ger­man au­tomaker is mak­ing in elec­tric vehicle pro­duc­tion.

World­wide, the com­pany ex­pects to in­vest about $50 bil­lion in elec­tric ve­hi­cles over the next five years, in­clud­ing in North Amer­ica, with Chat­tanooga seen as “a nat­u­ral fit” for pro­duc­tion, the au­tomaker said last year.

“That’s their long-range bet,” said DeLorenzo about VW’s over­all elec­tric vehicle plans. North Amer­i­can assembly of elec­tric ve­hi­cles is ex­pected to help ac­count for planned global pro­duc­tion ca­pac­ity of 1 mil­lion bat­tery-pow­ered ve­hi­cles by 2025, ac­cord­ing to VW.

Ten­nessee Gov. Bill Haslam told the Times Free Press last month the state is “in the mid­dle of se­ri­ous con­ver­sa­tions” with Volk­swa­gen about the car­maker ex­pand­ing pro­duc­tion in Chat­tanooga.

“Volk­swa­gen is go­ing to build an elec­tric vehicle. We’re hop­ing and en­cour­ag­ing them to build that vehicle right here,” Haslam said.

VW already em­ploys about 3,500 peo­ple in the city, and Chat­tanooga Mayor Andy Berke said Volk­swa­gen is “a big part” of the area’s econ­omy. He noted that VW is im­por­tant not just be­cause it’s here, but also due to the va­ri­ety of com­pa­nies that are part of the au­tomaker’s sup­plier base.

“Ges­tamp is one of our big­gest em­ploy­ers now,” Berke said about the Span­ish com­pany that sup­plies parts to VW’s Chat­tanooga plant and other au­tomak­ers in the re­gion with nearly 800 work­ers at three sites in Hamil­ton County. “That’s a big piece that Volk­swa­gen brings to the com­mu­nity.”

In ad­di­tion to the new Pas­sat made in Chat­tanooga, VW already plans pro­duc­tion of a five-seat sport util­ity vehicle later this year based off of the sev­enseat At­las SUV, which it be­gan as­sem­bling in 2017.

DeLorenzo said as sedan sales slow, those of SUVs con­tinue to ramp up — not only in vol­ume and model count but au­tomak­ers are look­ing at dif­fer­ent ways of “slic­ing and dic­ing the seg­ment.”

New, sportier SUVs with just two rows of seats and V-6 en­gines are ap­pear­ing, such as the five-seat At­las and oth­ers, he said.

“That’s sort of the next big thing,” DeLorenzo said.

For many years, a dom­i­nant body style among ve­hi­cles was the coupe, then mini­vans be­came pop­u­lar and now it’s crossovers and SUVs, he said.

“Things keep evolv­ing and chang­ing,” DeLorenzo said.

Jes­sica Cald­well, an an­a­lyst for the on­line auto re­searcher Ed­munds, said the At­las five-seater is “a promis­ing vehicle” for VW.

“It’s more of the sweet spot” in the mar­ket­place, she said.

Cald­well said VW has been late to the SUV game and its ve­hi­cles don’t have the same name ca­chet as the Ford Ex­plorer, for ex­am­ple.

But, she said, the At­las is “cer­tainly some­thing they have to do with the change in the mar­ket dy­nam­ics.”

Pas­sat sales have fallen while buy­ers turn to SUVs and trucks. De­spite a 32 per­cent drop in sales of the Pas­sat last year to 41,401 units, the car mar­ket in the U.S. is still mas­sive with about 4 mil­lion sold an­nu­ally, DeLorenzo said.

“The vol­ume is still fairly sig­nif­i­cant,” he said.

As VW and its sup­pli­ers grow in Chat­tanooga, one key for the busi­nesses is find­ing more qual­i­fied work­ers.

Berke said the city has started an Of­fice of Work­force De­vel­op­ment to help all em­ploy­ers and con­nect them with high-qual­ity work­ers.

“The school sys­tem plays a huge role in that, the com­mu­nity col­lege, UTC,” he said.

Berke said work force pres­sures aren’t all bad be­cause the em­ploy­ers need to pay more and wages rise for work­ers.

“That’s what we’ve seen in our city,” the mayor said. “In my mind, while hav­ing trou­ble find­ing good em­ploy­ees is def­i­nitely a prob­lem, the pos­i­tive side is that em­ploy­ers pay more. We want em­ploy­ers to come here and grow and have a high qual­ity work­force. That means peo­ple can earn more.”

Con­tact Mike Pare at [email protected]­freep­ or 423-757-6318. Fol­low him on Twit­ter @MikePareTFP.


A Volk­swa­gen em­ployee changes his tool while work­ing on ve­hi­cles in the assembly line at the Volk­swa­gen Assembly Plant in 2017, in Chat­tanooga. The au­tomaker is ex­pected to un­veil Mon­day its new­est Volk­swa­gen Pas­sat sedan, which is pro­duced in Chat­tanooga.

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