Volkswagen Sees Adding Midsize SUV to U.S. Market Lineup

Volkswagen AG (VOW), Europe’s largest carmaker, plans to add a midsize sport-utility vehicle to its U.S. lineup, the chief executive officer of its unit in the country said today.

“There’s a great opportunity for us for a midsize SUV in the U.S.” that would be positioned between the smaller Tiguan and larger Touareg SUVs, Volkswagen of America CEO Jonathan Browning told reporters at an Automotive Press Association event in Detroit. He declined to say when the company may introduce the model or whether it was in development.

A midsize SUV would help complete Volkswagen’s “core portfolio” in the U.S., Browning said. The Wolfsburg, Germany-based automaker is counting on revamped versions of its Passat, Beetle and Jetta cars that have been introduced since 2010 to reach U.S. sales of more than 500,000 vehicles this year.

Volkswagen’s two SUVs sold in the U.S. have a more than $20,000 gap in pricing, with the smaller Tiguan starting at $22,840 and the Touareg beginning at $43,375, according to Volkswagen’s website.

The company opened a $1 billion factory one year ago in Chattanooga, Tennessee, to build 150,000 Passat sedans a year. The Chattanooga plant is adding 1,000 workers this year to meet demand for the Passat, boosting annual production capacity to more than 170,000 units, Browning said.

The factory could expand to produce more than 250,000 vehicles annually through potential future investment throughout the plant, Browning said. The company hasn’t decided whether to proceed with such an investment, he said.

U.S. industrywide light-vehicle sales in May probably exceeded VW’s internal forecast for a 20 percent increase from a year earlier, Browning said.

“At the moment, I would be surprised if it broke through the 30 percent level, but I think our forecast of 20 percent is maybe a little on the conservative side,” he said.

Volkswagen’s U.S. unit is based in Herndon, Virginia.

To contact the reporter on this story: Craig Trudell in Detroit at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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