When Volkswagen opens its new U.S. assembly plant tomorrow, it will be a critical step in the maker’s plan to double sales by 2018 – in part by relying on low wages to help make models like the all-new 2012 Passat more competitive.
The average blue-collar worker at the new factory, Chattanooga, Tennessee, will earn just $27 an hour – including wages and benefits – or barely half the average $52 an hour for workers at Detroit’s union-organized plants. VW will also have a significant cost advantage over other so-called transplant assembly lines operated by Japanese and other European makers.
That could provide a significant boost for a company that has been saddled with a heavy premium on products imported from Germany, where high labor costs have been compounded by the weak U.S. dollar.
VW has been pressing hard to emphasize value – something that worked for the legendary Beetle nearly half a century ago – rather than focusing on German engineering as an excuse for higher prices. When it launched an all-new Jetta, last year, it introduced a stripped-down model, the Jetta S, at just $15,995 — $2,000 lower than the starting price for the 2010 model.