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DATE News (chronologically)
02/13/12
automotive
VW to decide on North American Audi plant this summer  Volkswagen AG expects to choose a site for Audi's North American plant by the summer, and locations in Mexico and the United States are in the running, according to Michael Macht, VW's head of manufacturing.

After picking a site it will take about 2½ years to begin production, Macht said in an interview with Automotive News Europe.

VW has yet to determine which Audi model it will assemble there, he added. But the decision on where to locate the factory is closely linked with the company's desire to bring another Volkswagen SUV, larger than the Tiguan, to the United States, he said.

"The two decisions are closely related, and we expect to make them by the summer," Macht said.

The ability to source parts locally also is a factor, but at this point, VW has no "clear preference," he added.

Opening a North American plant is crucial to Audi's aggressive growth plans, which include reaching U.S. sales of 200,000 vehicles by 2018.

Last year Audi had a record 117,561 U.S. sales, up a 16 percent from 2010. It hopes to make similar gains again this year, but executives admit growth is being constrained by short supplies of key models, including the Q5 and Q7 SUVs.

Both the United States and Mexico have pluses and minuses as potential production locations for Audi, Macht said.

Mexico is exempt from import duties, meaning VW can avoid the 10 percent duty levied on cars built in the United States and shipped to Europe. Trade among Mexico, Europe and the Mercosur countries (Brazil, Argentina, Uruguay and Paraguay) is duty-free, he said.

Also, VW already has a plant in Puebla, Mexico, where it builds the Beetle and Jetta. In 2013, it will open an engine plant in Silao, Mexico, which will produce 300,000 engines a year for North America.

Still, Mexico's central highlands, which are best suited for auto manufacturing, are crowded with factories and suppliers in five or six locations, competing for qualified labor. In the last year, Japanese manufacturers have chosen Mexico for three car factories in the region, Macht said.

At the same time, the "Made in U.S.A." statement is an important one for VW, and there is still room to add capacity at VW's Chattanooga, Tenn., plant that opened in May, Macht said.

He added: "Another advantage is the strong existing supplier structure" in the United States. Autonews.com

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