Volkswagen North America $7 billion investment plan

Volkswagen North America has announced a $7 billion investment plan over the next five years, as well as a new seven-seater SUV (sports utility vehicle) launch in the region in 2016.

While recovering strongly worldwide after the Great Recession, Volkswagen’s sales in the US have been disappointing.

Volkswagen North America, which in 2013 said it was aiming to become the largest automaker in the world within five years, added that it has a target of selling more than one million vehicles (including Audis) in the US by 2018.

In order to reach the number one spot worldwide, Volkswagen will need to overtake General Motors and the current global leader Toyota.

Martin Winterkorn, the company’s global Chief Executive, said “As a group, we will be investing over $7bn in Volkswagen North America over the next five years. Volkswagen’s midsize SUV for America is on its way!”

Volkswagen – recovering from the Great Recession

Volkswagen is recovering from a serious fall in sales after the financial crisis that caused the Great Recession. In 2009, global sales dropped to 10.4 million, a fall of nearly 40% compared to 2007.

The BBC quotes industry experts who believe 2013 was the company’s best year since 2007, with nearly 15.6 million new vehicles delivered.

The current global economic rebound has favored nearly all vehicle makers. Volkswagen’s luxury brands reported record sales for 2013. Porsche’s sales rose 15% compared to 2012, Audi’s 8.3% and Bentley’s 19%.

Volkswagen says its luxury brands have seen exceptional sales growth in many emerging markets, including China, the Middle East and Asia; in its major market – the US – sales have also increased.

Where will Volkswagen’s SUV be assembled?

When announcing the planned launch of the new 7-seater SUV for 2016, Winterkorn did not say whether it would be assembled at its Chattanooga plant in Tennessee in the US, or in Puebla, Mexico where production of the Golf compact starts this week and is expected to be launched into the North American market in the summer.

Volkswagen’s passenger cars brand is better positioned today in the United States than ever before, Winterkorn stressed. “The new Golf features the latest generation of our TSI and Clean Diesel engines as well as electric drive and plug-in hybrid technology. We want many more American drivers to feel at home with our Group brands and are working to achieve that with one hundred percent commitment and plenty of passion,” he added.

The Volkswagen Group, which owns Audi, Seat, Skoda, Lamborghini, Bugatti, Porsche, and Bentley sold 600,000 vehicles in North America in 2013, a fall of 7% compared to 2012.

Volkswagen North America ousted its chief Jonathan Browning in December. The new boss for the region is Michael Horn, an after-sales specialist.

In an interview with Reuters, Horn said “[Volkswagen must improve] the speed at which we bring new models to the market and innovation to the market. We have already been improving.”