Volkswagen to Build Factory in Chattanooga, Tennessee

It's official: Volkswagen will open a factory in Chattanooga, Tennessee, to build vehicles for U.S. consumption.

"This is a significant step forward in achieving our goals in the U.S. market," said Stefan Jacoby, president and CEO of Volkswagen Group of America. "Today's decision is a fundamental part of our new strategic direction in the U.S. and our five-pillar strategy."

That strategy includes building up to 150,000 vehicles at the new facility annually - nearly half of Volkswagen's U.S. sales goal for the year 2012. The plant could be home to a number of products, including a mid-size sedan designed exclusively for North America. Production of the car is scheduled to begin in 2011.

The factory itself will be built twelve miles outside of Chattanooga on a 1350-acre plot of land located close to rail lines and Interstate 75. Volkswagen expects to create 2000 jobs and invest nearly $1 billion in opening the new plant.

The decision is somewhat surprising, given that reports had suggested VW favored Huntsville, Alabama, as its first choice location. Michigan, Volkswagen's previous North American home, was also in the running.

"We reviewed three excellent sites," said Jacoby, "but Chattanooga is an excellent fit for the Volkswagen culture, having an exceptional quality of life and a long manufacturing tradition."

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