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CHATTANOOGA, TENN. — Volkswagen has approved plans for a vehicle production factory in Chattanooga. The project includes an investment volume of up to $1 billion.

The first stage of construction is designed to provide annual capacity for the complete production of 150,000 automobiles. This will include body-production, paint-shop and assembly operations. A cutting-edge modular production system will also be put in operation.

The management board chose Chattanooga out of 25 potential sites because it outperformed the next-best candidate sites in terms of providing an existing infrastructure of component’s suppliers; an overqualified workforce; and the availability of 550 hectares of developed property with direct transport connections. Volkswagen CEO Martin Winterkorn says the new site will be key in positioning the company for long-term success.

“The United States market is an important part of our volume strategy and we are now very resolutely accessing that market. Volkswagen will be extremely active there,” Winterkorn says.

Volkswagen said they will look to employ a staff of approximately 2,000 at the site over the medium term, while additional jobs will be created in the supplier and logistics sectors.

“We will be selling 800,000 Volkswagen in the USA by 2018, and this new site will play a key role,” Winterkorn says. “This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region.”

The first vehicle to be manufactured will be a new midsize sedan tailored specifically to the U.S. market. Production is scheduled to commence in early 2011.

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