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Mexican President Visits VW’s Puebla Plant

The Mexican addition is part of a larger and extremely ambitious $2 billion expansion in North American markets.

by on Jul.23, 2009

Mexican President Felipe Calderón at Puebla

The announcement in Puebla is part of a larger North American strategy confirmed about a year ago when VW revealed an "ambitious" plan of selling 800,000 Volkswagens annually by 2018.

Mexican President Felipe Calderón stopped by the Puebla plant of Volkswagen de México this week as construction proceeded to expand the plant’s capacity by 300 units to 2,100 vehicles a day.

The expansion of the plant will cost $410 million and, along with almost $600 million in supplier tooling, is part of preparations underway for a new model for the Mexican market.

Calderón was met at the Puebla plant by Mario Marin, Governor of Puebla State, and Otto Lindner, CEO of Volkswagen de México.

“Our strategic objectives for Volkswagen de México are clear: we are aiming for further growth in Mexico and to extend our market leadership. Our new models are the basis for this growth. In addition, we will continue to increase our purchasing volumes in North America and especially in Mexico,” said Lindner.

The announcement in Puebla is part of a larger North American strategy confirmed about a year ago when VW revealed an  “ambitious” plan of selling 800,000 Volkswagens annually by 2018 as it abandoned Michigan and moved its North American headquarters to Herndon, Virginia.

It also announced a $1 billion North American factory in Chattanooga, Tennessee, that will build a mid-size sedan in 2011– the first currency hedging U.S. plant since VW abandoned the Rabbit factory in Pennsylvania in 1988 after a four year run of declining sales. The new car – code named NMS – and the new plant have promise, but these are similar to promises that have been made and failed decades before.

Currently VW Group sales in the U.S. are running at 163,000 vehicles through June of 2009, down 17% for the year before. Volkswagen, its volume brand, sells the Rabbit, New Beetle, New Beetle convertible, GTI, Jetta, Jetta SportWagen, Eos, GLI, Passat, Passat wagon, CC, Tiguan, Touareg 2 and Routan through approximately 600 independent U.S. dealers.

New for the 2010 model year is Golf, aka Rabbit, aka Golf, aka Rabbit.

The relatively fuel-efficient two- and four-door hatchback models will be offered with an extremely efficient, if unfashionable, 2-liter turbocharged diesel engine that’s capable of 30 mpg in city driving. Nonetheless, the Golf is the right car at the right time. The turbocharged, 200 horsepower GTI performance version comes with a six-speed manual transmission or an optional six-speed dual-clutch automatic. It provides some advertising sizzle, if not high sales numbers.

The Golf over the years has lost the crispness of the original, as it gained weight and luxury options that made it a much bigger, more expensive car. The styling of the new one hints at the forgotten past by reverting — sort of– to the look of the original grille. However, the car is rounded and flared, with character lines added. Overall, as always, it’s a safe, mainstream design that is in keeping, on the subdued side, with all current Euro designs. This has worked well over the generations as Golf has sold 26 million units in 120 countries. Whether it’s enough to revitalize the U.S. is debatable. Currently Golfs, err, 2009 Rabbits range from $16,000 to $18,000 in asking prices for base models, before adding numerous options or subtracting for generous incentives-  a pricing issue that VW needs to resolve if it wants to compete with much more popular Honda, Toyota and Nissan models.

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