#crossblue

What seems to be a barely disguised Volkswagen SUV has been photographed driving near the automaker’s southern California test facility.

If it is what we think, it’s an important vehicle for the automaker. A three-row SUV has long been part of Volkswagen’s U.S. growth plan, but now it might serve as its survival plan.

Volkswagen will still invest $900 million in its Chattanooga, Tennessee plant despite company-wide cost cutting from its diesel disaster, the automaker announced Thursday.

The company had long planned on a mid-size, three-row SUV to compete in the U.S.. However, those plans were upended when the Environmental Protection Agency announced in September that Volkswagen’s diesels had been illegally polluting, and the company shed billions from its value in following days.

The three-row SUV, which may follow closely Volkswagen’s CrossBlue Concept, was announced last year for the Tennessee plant. Volkswagen said it would begin building the SUV at the end of 2016.

With the Volkswagen Tiguan going bigger for the United States market in 2017, senior execs believe a smaller entry-level crossover could soon take its place.

This much we know: the Volkswagen brand sold more new vehicles in America in 2012 than in any year since 1973. The company predicted moderate growth for the Volkswagen brand in 2013, but sales fell 7%. Still, by topping 400,000 units, Volkswagen sales were 35% higher than they were a decade prior. Through the first seven months of 2014, Volkswagen brand sales are down 14% in the United States, or 13% if we exclude the transitioning Golf lineup.We also know that the company’s bigger SUV, the Touareg, is tasked with taking the fight to premium utility vehicles. The smaller Tiguan, mostly unchanged since 2008, has 36% less cargo capacity behind the rear seats than Honda’s CR-V does.

Volkswagen appears ready to announce where its upcoming mid-size SUV — based upon the CrossBlue concept from the 2013 Detroit Auto Show — will be assembled.

The Volkswagen CrossBlue and CrossBlue Coupe will be made in China by the Shanghai-Volkswagen joint venture, Carnewschina reports today. According to the report, the car will be built when Volkswagen’s new factory will open in Changsha in China’s Hunan Province.