Volkswagen Chooses Tennessee for SUV Program

Volkswagen AG will spend $600 million to prepare its factory in Chattanooga, Tenn., to begin making a seven-passenger SUV/crossover in late 2016.

VW showed a concept version of the midsize vehicle, dubbed the CrossBlue, at the Detroit auto show last year.

Adding the crossover will create about 2,000 jobs at the Chattanooga plant. The facility currently employs 1,500 workers to build the Passat midsize sedan.

VW also will open a product design and development center in Chattanooga that eventually will employ about 200 engineers. A primary objective of the facility will be to identify customer feedback and integrate it into products developed for the American market.

VW reiterates its aim to hike U.S. sales of Volkswagen brand vehicles to 800,000 units from fewer than 408,000 last year. VW's sales this year are running 13% below year-earlier volumes.