published Wednesday, April 11th, 2012

Volkswagen eyes Mexico for Audi factory, state official says

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Tennessee's economic development chief said Tuesday he isn't surprised by reports that Audi plans to bypass Chattanooga and build its first North American plant in Mexico.

"Mexico is what we've heard. We haven't verified it yet," said Bill Hagerty, commissioner of the state Department of Economic and Community Development. "We want to see it here."

German magazine Der Spiegel reported recently, citing no named sources, that Audi has won the backing from parent Volkswagen to build the new plant in Mexico.

Hagerty, in an interview after the ribbon-cutting of Whirlpool Corp.'s new $200 million plant in Cleveland, Tenn., said a trade issue has hurt the state's chances to land the assembly plant by Audi, whose parent is Volkswagen AG.

Mexico is exempt from import duties and VW can avoid the 10 percent duty levied on cars built in the United States and shipped to Europe, a top VW official told Automotive News earlier this year.

Trade among Mexico, Europe and the Mercosur trading bloc (Brazil, Argentina, Uruguay and Paraguay) is duty-free, the official said.

Tennessee and Chattanooga economic developers have been vying for the Audi plant, which could be built on 1,200 acres next to VW's new factory at Enterprise South industrial park.

The new factory will be designed to build Audi's Q5 sport-utility vehicle starting in 2015, Der Spiegel said. VW's supervisory board's next scheduled meeting is April 18.

An Audi spokesman declined comment.

In January at the Detroit International Auto Show, Chattanooga Mayor Ron Littlefield said Audi officials have been "in and out" of the Scenic City.

Also, Audi of America President Johan de Nysschen said at the auto show that Chattanooga is "an attractive potential location" for future production of Audis. But, he added that the Volkswagen brand already has aggressive plans for its Chattanooga site, which produces the Passat midsize sedan.

Last month, VW announced plans to hire 800 more workers in Chattanooga as sales of the Passat grow, pushing its workforce to about 3,500 in the city.

In addition, officials have said they're trying to attract production of another model to Chattanooga.

Audi is trying to overtake German rival BMW as the world's top-selling luxury-car maker.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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