Expanded Production in U.S. Hinges on Trump Trade Decision, Volkswagen Hints

Volkswagen’s sole U.S. assembly plant was spared any fallout from the company’s wildly expensive diesel emissions scandal, but the upcoming North American Free Trade Agreement negotiations could see VW throttle back its future plans for the facility.

The Chattanooga plant, which builds the Passat and Atlas, has seen $900 million in investment over the last couple of years. More models are anticipated, and the automaker said it expects the plant to reach full production by 2020. However, recent threats of an import tax to be levied on German automakers has VW brass in wait-and-see mode before sending any new models or money to Tennessee.

Volkswagen brand chief Herbert Diess made a telling remark outside yesterday’s unveiling of the Arteon luxury sedan in Germany, Bloomberg reports.

“It has been a roller-coaster of emotions over the past months,” Diess said. “We hope that we’re going to have clarity in the next months. It influences investment decisions.”

Diess was referring to rhetoric emanating from the Trump administration, which hopes to redraw NAFTA in a manner that prioritizes U.S. workers and industry. One way it could do that is to levy an import tax on foreign automakers. That would be bad news for an automaker that imports the bulk of the vehicles it sells in the U.S. from factories in Mexico and Europe.

Before any new investment occurs in the U.S., Diess and other top brass want to know the U.S.’s intentions.

Chattanooga took on a larger presence in VW’s global portfolio following the diesel debacle. As a way to boost revenue and sales, the automaker plans to offer new crossover and SUV models to a utility-hungry America. Some of those vehicles, as well as the company’s future crop of electric vehicles, were expected to find a production home in an American plant.

“We will be significantly stepping up our activities in the USA,” Diess said in a statement last November, emphasizing a focus on SUVs. “In a second stage, we will then take our new electric cars to North America.”

Those electric vehicles, which share the same architecture as its I.D. concept vehicles, would appear in 2021, Diess said at the time. NAFTA talk are expected to get underway in August.

[Image: Volkswagen]