Report: Volkswagen To Build New Golf In Mexico, Uninterested In More U.S. Production

The next version of the Volkswagen Golf hatchback may be built a little farther from home, as the automaker may consider building American-specification versions of the car in Mexico. Automotive News reports that Volkswagen could announce plans to build the Golf in Puebla, Mexico, within the next few weeks.

We previously reported that Volkswagen's new modular MQB chassis, which underpins the 2014 Golf, could be built in Mexico. Building the hatchback there for U.S. consumption would be more profitable than the current strategy of assembling the car in Germany and shipping in to the States. The Volkswagen Jetta is currently built at the plant in Puebla, Mexico.

The new Golf could reportedly go into production in Mexico by 2014 or 2015. It would be exported to the U.S., and potentially a handful of other nearby countries. Volkswagen usually assembles the Golf at factories in Wolfsburg and Zwickau, Germany.

Of course, Volkswagen already has a new plant dedicated to American-market production in Chattanooga, Tennessee. But the automaker reportedly plans to continue Passat production there, and add a new SUV rather than the Golf. Volkswagen CEO Martin Winterkorn told AN that the company might build "an SUV that ends up roomier than the Tiguan" in Tennessee if production capacity permits.

Luxury brand Audi has also announced plans to build a new SUV in Mexico starting in 2016. That reflects that automaker's interest in assembling vehicles in North America, but also highlights the Volkswagen Group's hesitancy to spend more money opening plants in the U.S.

Earlier this week, Volkswagen of America CEO Jonathon Browning openly criticized American political and financial problems, claiming that heavy national debt discourages automakers from investing here. He said that's why Volkswagen would rather invest in places like Mexico, as opposed to the U.S.

"This country needs to get its house in order… If the United States wants to continue to be a magnet for foreign investment, it will have to compete for it," Browning said in a prepared speech at the Brookings Institute in Washington, D.C.

By building cars in Mexico and exporting them to other countries in the world, automakers can save 10 percent compared to paying export taxes from the U.S. -- hence why Audi will build its new SUV in Mexico.

"While no one is writing off the U.S. economy by any stretch, the U.S. must fix its underlying economic infrastructure," Browning said.

Sources: Automotive News 1, 2; Volkswagen

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