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Volkswagen's goal is capture Americans' hearts

By: Mike Pare
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Stefan Jacoby

Aiming to pass Toyota as the world's No. 1 automaker, Volkswagen is making a $1 billion bet in Chattanooga in order to ramp up U.S. sales to 1 million vehicles a year.

Auto industry analyst Erich Merkle of Crowe Horwath said VW is a small player in the U.S. market now and made mistakes in the past.

But the plan to build a midsize sedan in Chattanooga in early 2011 that is priced similarly to a Toyota Camry or Honda Accord is a move in the right direction, Mr. Merkle said.

"That's really what they needed," he said. "It will be much better received and more appropriate for the American market than where it has been in the past."

In addition, Mr. Merkle said he expects VW will build a new small sport utility vehicle in Chattanooga based on the same platform as the sedan.

The German automaker has high hopes of blowing past Toyota and General Motors by tapping into the American market in a big way and by selling more cars in the emerging markets of China, Brazil, India and Russia.

"It's extremely ambitious," research analyst Aaron Bragman for Global Insight in Detroit said of VW's strategy. "Whether (VW) can pull it off is a matter of debate."

Already Europe's biggest car company by volume, VW wants to expand its dominance by boosting market share on other continents -- in spite of the economic crisis that has gripped the United States and spilled across the globe.

While VW is tight-lipped about the car to be produced in Chattanooga, Mr. Bragman said he imagines the vehicle will be a new version of its Passat sedan.

The new cars VW introduces in the United States will have a "softer" suspension and ride than current models, and they will have a high-level interior quality, Mr. Bragman said.

"It's going to start pumping out products that look like Toyota in terms of appeal," Mr. Bragman said.

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