VW Considers North American Plant
July 09, 2007

Volkswagen is considering building a new North American factory if the dollar stays weak, CEO Martin Winterkorn said in an interview with German magazine Focus, picked up by Reuters.

Winterkorn admitted in the interview that VW had performed poorly in the U.S. and that Volkswagen’s “planned new offices” moving “away from Detroit” would bring VW closer to U.S. consumers, according to the Reuters report. A clarification later by Volkswagen said the automaker is planning to set up a second administrative hub near Detroit.

A plan to move U.S. headquarters from Detroit like is news to Volkswagen employees. Such a move by VW and Audi out of the Detroit suburbs has been rumored within the past couple of years.

As for manufacturing, Volkswagen has only one factory in North America currently, in Puebla, Mexico. It makes the Jetta and New Beetle as well as buses and trucks.

Reuters noted the euro is near an all-time high against the U.S. dollar and Japanese yen, making it harder for European-made cars to compete with those produced in the United States and Japan.

"If the dollar stays at its current level, one has to consider a factory in North America very seriously," Winterkorn told Focus magazine.

Clearly, Volkswagen AG is shaking things in up in the U.S. Last week, the German automaker announced that Stefan Jacoby will become president and CEO of Volkswagen of America Inc., the holding company for the Volkswagen and Audi brands in the U.S. His mission is to restructure Volkswagen’s sagging U.S. business and work closely with the German management board.

The company’s statement said: "The objective is to achieve further significant expansion in the position of Volkswagen and Audi in the U.S. market through attractive and competitive products.”

The Volkswagen group lost $827 million in North America last year; first-half 2007 figures will be announced later this month. The Volkswagen brand sold 235,140 vehicles in the U.S. last year and expects about the same this year. At its peak in 1970, VW sold almost 570,000 units in the U.S.

Audi, meantime, has been setting new sales records, but is still not profitable in the U.S. This year, Audi expects to break last year's U.S. sales record of 90,116 units. It expects to break even in the U.S. this year and possibly be profitable next year.

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