From today's Detroit Free Press:

VW lays out strategy for new U.S. models

BY JUSTIN HYDE
FREE PRESS WASHINGTON STAFF

HERNDON, Va. – Volkswagen of America’s top executives outlined a strategy today to turn the European automaker’s money-losing U.S. arm into a pillar of its plans to surpass Toyota Motor Co. as the world’s largest – and most profitable – automaker.

With a goal of selling 800,000 VWs in the United States by 2018 – a threefold increase from this year’s levels – the automaker will add several new models designed specifically for American buyers, including a new sedan, a seven-seat sport utility and an updated version of its iconic Beetle.

And instead of importing most of its models from Europe, where currency fluctuations have left the company losing billions in North America, its high-volume vehicles will be built in the United States or Mexico, with parts from nearby suppliers.

VW is spending $1 billion to build a plant in Chattanooga, Tenn., that will launch a new midsize sedan in 2011. Stefan Jacoby, VW’s North American chief, said the model will be larger than the current Passat but cost less – targeting the Honda Accord, Chevrolet Malibu and Toyota Camry head-on.

“We want to be the No. 1 automaker globally,” Jacoby said today during a briefing at VW’s U.S. headquarters in Virginia. “Not everybody believes in this goal. We believe in this vision we have, and we are working very hard on its realization.”

VW executives said the company would refresh its entire lineup by 2011, and would target new parts of the market to boost its sales. That includes building some kind of seven-passenger SUV to compete against the Honda Pilot, Toyota Highlander and Chevrolet Traverse. VW has a large SUV, the Touareg, that can carry a sticker price of more than $60,000.

Jacoby said the company also would bring a new Jetta and Beetle in the next couple of years with updates that reflect American tastes more than the current models. He said the company was making progress on improving quality, which has lagged Asian and American competitors in the past. He also said the company would consider smaller models, but would not chase parts of the market such as pickups where VW couldn’t stand out.

“It’s not our intention to make VW a boring brand,” he said.

Jacoby declined to say what else VW might build in Chattanooga besides the new sedan, but executives said the automaker would need to add models there and likely build new engine plant somewhere in North America to make its plans for growth.