By Neal E. Boudette
DETROIT-- Volkswagen AG plans to invest $7 billion in North
America over the next five years, in a bid to accelerate its growth
in the region and catch up to key competitors like General Motors
Co., Ford Motor Co. and Toyota Motor Corp.
The German auto maker said it intends to use the money to build
a new plant in the region although a location hasn't yet been
chosen.
"We have not made that decision in the supervisory board,"
Volkswagen's chief executive, Martin Winterkorn, said.
The company also reiterated its goal of boosting it sales of
VW-branded vehicles in the U.S. market to 1 million cars a year by
2018. Its VW brand had been growing rapidly in the U.S., but it
stumbled in 2013, when sales declined despite a rise in the overall
U.S. market.
Despite the decline, VW still sold more than 400,000 vehicles in
the U.S. in 2013. Volkswagen's Audi unit also sold more than
150,000 cars in the U.S. last year.
"The U.S. is a cornerstone of our 2018 strategy," said Mr.
Winterkorn.
Part of the Volkswagen investment will go toward producing a
midsize sport -- utility vehicle, a model now absent from the VW
brand lineup.
"We really need that vehicle," said Jeff Williams, owner of
Williams auto world, a Volkswagen--Audi--Subaru dealership in East
Lansing, Michigan. "That is a big, big segment and we have to be
competitive there."
Mr. Williams noted that the Q5 midsize SUV is a top-selling
model for his Audi franchise, and the Forester and Outback SUVs are
top sellers for his Subaru store.
Volkswagen opened a plant Chattanooga, Tenn., in 2011, but
hasn't yet been able to use all of the plant's capacity, in part
because of its sales slump in 2013.
In the past, the company has said it has space at the
Chattanooga location to build a second plant.
In the last five years Volkswagen has been trying to increase
its share of the U.S. market and expand production here. In the
past it sold mainly German-made cars exported to the U.S., but it
has been hurt by unfavorable exchange rates that make German-made
cars more expensive in U.S. dollars.
It has a plant in Mexico that will begin producing the new 2015
Golf compact this week, and is building a second plant in Mexico.
With yet another plant coming as a result of its $7 billion
investment plan, it will eventually have four plants in North
America--enough to produce roughly one million vehicles a year.
Write to Neal E. Boudette at neal.boudette@wsj.com
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