By on June 23, 2014

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Reuters is reporting that the long-awaited decision on the production site of Volkswagen’s new crossover is set to be handed down any day now, and the winner is Chattanooga.

According to Reuters, a generous incentive package swayed the decision to build the new CUV in the United States, rather than Mexico

The state of Tennessee is offering tax breaks, staff training, free land and infrastructure upgrades worth about $300 million in total, giving it a clear edge over Puebla, Mexico

Dealers have been crying out for a CUV sized above the Touraeg, but priced closer to the Honda Pilot (rather than in the pseudo-luxury space occupied by the Touraeg). With CUV sales growing in globally, the lack of competitive crossovers in Volkswagen’s North American product portfolio is undoubtedly holding them back from further growth in North America. The new three-row CUV should help put them on track – but without a next-generation Tiguan that’s adapted to North American tastes, it may be too little too late.

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27 Comments on “Volkswagen Crossover Will Be Built In Chattanooga...”


  • avatar

    The auto industry feels like it’s the only thing moving right now.
    The Housing industry is paralyzed.

    • 0 avatar
      Dave M.

      I’m dying just a little inside because I sound like Rick Perry, but come to Texas. All the major cities are experiencing massive growth.

    • 0 avatar
      onyxtape

      Housing is highly dependent on location.

      Where I live, buyers literally write love letters to sellers with their offers. Houses are selling routinely 25%-30% above asking within hours of the start of listing and all conditions/inspections waived. That is, if they can get there before the Chinese and Canadian investors with suitcases full of cash.

    • 0 avatar
      hybridkiller

      The housing industry isn’t paralyzed, but mortgages are still pretty tough to get for people with less than excellent credit.
      Sounds like someone’s trying to sell house(s) and it’s not going so well.

  • avatar
    Xeranar

    I’m not surprised they’re finally getting into a clearly lucrative market. The remaining topic is the obvious: Tennessee legislators worked hard to prevent unionization then handed over 300 million in tax breaks and benefits for what was going to happen regardless of unionization. The irony is palpable…

    But it’s nice to see another entry in the market, if it’s out by 2016 I may take a gander at it.

    • 0 avatar
      Landcrusher

      Hey! You didn’t say subsidy. :)

      What did they give them? I am really sick of this game. Makes me want to start a car company so I can demand proportional offers.

      • 0 avatar
        Xeranar

        I’m actually not bothered about the tax breaks and incentives, they’re a policy measure that tend to be overused. Especially when we discuss local governments and the obvious bidding wars that occur to cut their own throats for what amounts to little in actual benefit for their own region. More so because unless they’re able to gain payroll taxes the probability of the workers living within the borders creates a weak dynamic between the benefits given and those received. But that’s a policy issue of more practical concerns and implementation. That’s a matter of what we should offer rather than what we do.

        My issue is that a particular talking point of the right is about such arguments of waste and such and ultimately these things are scoffed off the table even though they tend to cost as much if not more than social programs per capita. Not to use an overused slogan but it rings so true when it’s socialism for the rich and capitalism for the rest of us.

        • 0 avatar
          Landcrusher

          You have no idea how much they cost. It’s not accounted for anywhere. The cost is the perception and inefficiency of the unfairness, the corruption, the interference to the best use of resources, and the suppression of innovation. I could go on.

          • 0 avatar
            Xeranar

            Actually, I could point you to the simple math done to figure out if the tax incentives are justified in how much they return. I mean, if we’re going to debate intangible goods be prepared for me to argue that unionism offers both tangible and intangible goods. It’s a two way street and I wasn’t actually suggesting the tax breaks were inherently bad, merely pointing out that the tangible goods in return for tax dollars is a quite measurable and rarely plays out in favor of the state or the citizens there in.

          • 0 avatar
            Landcrusher

            You lost me. Not sure where you stand. The math is all misleading, and not just because of externalities. And, you can show good and bad externalities of unions, but what good externality comes from propping up one business over another? Hell, I can likely do maths to justify murder. Some things are just wrong, and company specific breaks are just wrong.

            Why can’t the Feds abuse the commerce clause in a good way for a change and just squash all of these incentives? Certainly, building public infrastructure like roads to the facilities is justified, but you don’t get much farther before you are picking winners and losers. And, it can backfire. Houston spent a lot of money on Continental Airlines. When the merger took almost all the good jobs to Chicago, City Hall had to suppress their protests to keep from embarrassment over what a bad deal they had made. Our liberal Mayor is no dummy. I respect her ability to manage the city in spite of our differences of ideology, but not to outwit a bunch of corporate types over one of these deals.

            There have been only a couple Houston mayors in the last fifty years that were capable of really getting a good deal, but they all think they were. Besides that, some of the capable ones weren’t really putting the average citizen as top priority.

    • 0 avatar
      Big Al from Oz

      @Xeranar
      I’m not surprised either.

      Both sides want to give corporate welfare.

      Remember VW most likely bed both teams. This was evident with VW stating it supported a German style works council.

    • 0 avatar
      redav

      “Tennessee legislators worked hard to prevent unionization then handed over 300 million in tax breaks and benefits for what was going to happen regardless of unionization.”

      You tie together two things that don’t need to be tied.

      They fought the UAW for multiple reasons, including the UAW’s support & funding for their political opponents, as well as their belief that the business environment would be better without the UAW.
      They gave out handouts for multiple reasons, including the belief that taxes on VW, ancillary suppliers, and general business activity (e.g. sales taxes) would pay for the subsidies as well as the belief that more work equals more jobs equals better living for people. (I suspect they hold the notion that there are only two ways to reduce poverty: 1. Create jobs, and 2. Create more jobs.)

      Would they have fought the UAW if there had been no imminent expectation of the new model being built there? I believe so. Would they have offered hand outs to get the new model if the UAW was a non-issue? I believe so. I see no irony here.

      • 0 avatar
        Xeranar

        You just made an argument based on too many assumptions.

        First – The presumption that the State of Tennessee has any right to interfere with the affairs of a political party. I’ve heard this argument repeated that if a union comes in they’ll create democratic voters or the UAW’s war chest will grow slightly. That’s actually outside the scope of the State of Tennessee’s business, completely within the scope of Republican and right-wing advocates but not actually a state issue (see: Discussion over Corker’s remarks).

        Second – You’re completely right on the issue of their philosophical point of view but carefully remove yourself from the practical realities that that point of view engenders. To put it simply, you danced on the head of a pin to avoid admitting my nuanced view on handing over 300 Million in tax breaks is probably not going to pay for itself, not that I am wholly against it, the practical issues of the implementation of policy require these sweetheart deals because local and state governments are forced to play this game.

        But that’s where your assumptions still fall flat. Irony is an example of an activity that is in contrary to the point or perception. Going down river in Huckleberry Finn to escape slavery is the iconic one. Thus my example of how the Right fought hard as ‘fiscal conservatives’ while draining their own coffers to help VW expand amounted to an example. Disagree if you wish, but my position remains, I appreciate your willingness to ignore the ‘big picture’ more or less.

        • 0 avatar
          redav

          Wow, talk about too many assumptions and added fluff. My statement is that:

          1. The two issues are not necessarily connected, and
          2. their actions are what *is* expected given their platform and their philosophical viewpoints; thus, it is not “an activity that is in contrary to the point or perception,” and thus not irony.

          Do you agree/disagree with these points? You said you agree on the issue of philosophy (which was my only issue, actually).
          (Please don’t whine about fiscal conservatism; don’t accuse me of ignoring the “big picture;” don’t accuse me of failing to “admit” your nuanced view. Put down the tired talking points of a yellow dog party line and talk like an intelligent, social person who can think for himself.)

          I don’t care whether you think the subsidies will pay for themselves.

          I don’t care whether their actions are “fiscally conservative” or if fiscal conservatism is the best path. I doubt any national politician is a “fiscal conservative” anyway, so that doesn’t play into my opinions. However, I do think they think that business subsidies aligns with their values.

          I don’t care what the State of Tennessee’s rights are. They are individuals, and maybe they abuse their power (a common activity among prominent politicians). I have never claimed to agree with their tactics/methods, but I’ve also never denied them the opportunity to fight for their own agenda just like everyone else.

          I think your political bent is rather dumb and rote, but I agree we can disagree.

        • 0 avatar
          Xeranar

          Awww, Redav can’t handle I decided to call his attack on my rather benign rhetoric and tried to create dispersion. Calling you on it seems to have upset you because you basically tried to call me a damned fool after I pointed out my remark was within the premise put forward.

          As an aside, you really shouldn’t challenge any body’s position as ‘talking points’ without having a good handle on what we’re even discussing. Then again you feel my position is ‘dumb and rote’ which is simplistic and ignorant but again, lets just drop it at that, my partisan friend.

      • 0 avatar
        Pch101

        “You tie together two things that don’t need to be tied.”

        You should direct that complaint to Bob Corker and those in Tennessee state government who created a linkage between the availability of subsidies and the lack of a union.

  • avatar
    Dirty Dingus McGee

    Tax breaks, free land and infrastructure, etc are not unusual incentives at all for government to offer business’s. It’s only the large ones that get noticed and talked about. And if anyone thinks this is a uniquely USA issue, you are wrong. My company just put in a bid on some work at a small (50 jobs or less)industrial facility in Canada, about 1/2 way between Toronto and Hamilton. Doing some research on the company( always do to see their track record), we found that this area offered 10 years of no tax on the land, no cost infrastructure upgrades(mainly electrical and road access), to entice the company in. The area where I live has a smallish, approx 125 business’s, industrial park that offered incentives. In 15 years it went from 2 to the current 125 so I guess it works.

  • avatar
    Kenmore

    As ghastly shocking as McFly’s guitar shredding was to a 1955 audience, so are ghetto mega-wheels on a 2-box shape from the 90s.

  • avatar
    Big Al from Oz

    Putting politics aside, this VW CUV looks far nicer than the new Cherokee.

    I really think the front end of the VW is really nice. Maybe pickup trucks should look at this and get rid of those big rig grilles.

  • avatar
    LeMansteve

    So, reading between the lines, this new SUV will replace the Touareg?

  • avatar
    schmitt trigger

    Thank you Chattanooga, for helping us defeat the UAW. Here is your well deserved payment!

    Sorry, I could not resist….However and sarcasm aside, does anyone think that the State of Tennessee would have provided $300 mill in incentives to an UAW facility?

  • avatar
    Extra Credit

    I doubt the new CUV will replace the Touareg. I expect to see Volkswagen double down on their CUV offerings over the coming years, if they are serious about achieving greater volume in North America. Perhaps this new entry will be the first of many. Time will tell…

  • avatar
    Rick T.

    Interesting. I am consulting in an office complex at a major intersection off I-65 south of Nashville. Last week I saw an auto transport at a motel nearby. It had a number of VW’s on it including a couple of SUV/CUV shaped vehicles draped in what looked like burquas – white cloth with a screened windshield – on them. Thought about taking a picture but eh.

    • 0 avatar
      Extra Credit

      You may have witnessed something noteworthy, or they may have been regular Touaregs and/or Tiguans. They both leave their respective factories enclosed in their own Haz-Mat suits.

      • 0 avatar
        Rick T.

        Hey, didn’t know that. Thanks. There were only three vehicles on the trailer, two of which had those coverings. The other was a Passat. It was early morning and only about 10 minutes from the VW dealer and a couple hours from Chattanooga.


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