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New VW Engine Plant Confirmed in Mexico

German maker will redevelop an existing site in central Mexico.

by on Sep.22, 2010

The VW expansion given current U.S. sales and Japanese competition appears extremely ambitious.

The Volkswagen Group confirmed this afternoon that it will build a new engine plant in Silao, Mexico as part of its long-term expansion strategy in North America. (See Paul Eisenstein’s New Mexican Engine Plant to Support VW’s Chattanooga Assembly Line )

Beginning in 2013, the new plant in Silao will supply the latest generation of engines to VW vehicle plants in Chattanooga, Tennessee and Puebla, Mexico.

Volkswagen Group has previously said it is planning sales of one million vehicles in the U.S. – including 800,000 VWs – annually by 2018. The core element of this ambitious strategy is vehicles tailored to the demands of U.S. customers, such as the all-new Jetta and the New Midsize Sedan (NMS). Year-to-date VW brand sales are 173,000 units.

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The all-new Jetta is built in Puebla and the NMS will be produced in Chattanooga beginning next year. Both vehicles have a high degree of localization.


New Mexican Engine Plant to Support VW’s Chattanooga Assembly Line

Part of $4 billion U.S. expansion campaign.

by on Sep.22, 2010

Published reports out of Mexico suggest Volkswagen will build a new engine plant about 250 miles from Mexico City.

Volkswagen is reportedly planning to announce, later today, that it will add a new engine plant in the Mexican state of Guanajuato.  The facility is expected to supply powertrains to the automaker’s new assembly line in Chattanooga, Tennessee, and is part of a $4 billion investment campaign aimed at tripling VW sales in the U.S. by 2018.

The Chattanooga plant is scheduled to begin building an all-new model that VW has said will be critical to its effort to revitalize the American market, which peaked at roughly 600,000 sales a year in the early 1970s but is currently running at less than half that volume.  The ongoing question has been where the engines for that vehicle, codenamed NMS – for New Midsize Sedan — would come from. (See Ken Zino’s Mexican President Visits VW’s Puebla Plant)

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Jochem Heizmann, a member of the automaker’s Executive Council, gave a hint during a trip to Mexico, in July, saying VW planned to invest $1 billion in that country over the coming three years.