Volkswagen Plans To Increase Planned Chattanooga Plant Expansion By 25 Percent

Volkswagen is planning to increase the ongoing expansion of its Chattanooga plant even further. City documents show the company’s plans to add an additional 130,153 square feet to the factory expansion that began in January. This development will increase the originally planned expansion by approximately 25 percent, and will add an additional $17.8 million expense to the $900 million project.

According to VW plant representative Scott Wilson, the company has chosen “to exercise the financially responsible option to increase the size of the body shop expansion now to accommodate current and future production needs.” Wilson explained that doing this now will provide VW with flexibility as it integrates an innovative new way of assembling vehicles into the plant. The company is scheduled to go before a local industrial development board to seek permission for its new expansion proposal.

The Chattanooga plant will be used to assemble VW’s new midsize SUV by the end of 2016. Some see the company’s new SUV as a key method to reviving VW sales in the U.S., which are down approximately 9 percent for the year through March in comparison to 2014. Akshay Anand, an analyst at Kelley Blue Book’s KBB.com, said that the vehicle “can’t come soon enough, so it’s good they’re preparing appropriate production capacity for the vehicle.”

The documents that have been submitted to the city indicate that VW wants to increase the number of body shop bays from the 14 that were in the original plan. The company “would like to route new utilities that will be serving this current expansion so that they will not require being moved nor interfere with any future expansion,” the documents say.

VW originally announced the expansion to build the new SUV last year, which is planned to add 2,000 more jobs to the 2,400 positions that are already at the plant. The total plan for the plant’s original expansion was 512,886 feet, which includes increasing the size of the body shop, assembly area, pilot hall and warehouse space.

The company has also designed a VW national engineering and planning center to be built in Chattanooga, which is intended to develop current and future models and is expected to include at least 200 engineers by 2017. VW currently has six locations in the United States and one in Mexico where it has design and technical centers, a research lab and other similar operations. This work will be coordinated by the Chattanooga site in the future.

“We’ll be moving over research and development functions,” said Dr. Matthias Erb, who is overseeing the startup of VW’s new engineering and planning center. “This will be the central entity in all of the U.S., and hopefully all of North America.”

Tennessee Governor Bill Haslam has said that while the state is known for manufacturing cars, it hasn’t yet seen the establishment of research and development facilities. “It’s a new day in Tennessee in terms of innovation,” Haslam said of VW’s planned research center.

Erb explained that initially, the center will be focused on providing engineering support for the Chattanooga Passat sedan and the new SUV that VW plans to launch in 2016. He said that in the midterm, the center will develop VW body styles based on a new standardized assembly platform. The future of the center, Erb said, will depend on the success of its startup phase in addition to the level of support that it receives from the state and local government.