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Chattanooga, Tennessee awaiting Volkswagen plant expansion

The Volkswagen assembly plant in Chattanooga is a candidate to build a new SUV. Photo by Tim Barber.

If Volkswagen green-lights production of a new sport utility vehicle in Chattanooga, it will be viewed as one of Tennessee’s biggest economic development wins of the year.

“It certainly would be really large,” said Dr. Bill Fox, who heads the University of Tennessee’s Center for Business and Economic Research. If the estimates are right, the new production line will bring hundreds of millions of dollars in investment and around 1,000 new jobs.

VW’s supervisory board meets in Germany today. It’s the first meeting since the United Auto Workers dropped its appeal of the Chattanooga plant’s union election about three weeks ago. Tennessee state officials and VW have talked, but it may be too early for the company to announce whether it will make the new SUV in Chattanooga or Mexico.

VW has said Chattanooga is the front-runner for the seven-seat SUV, which would be based on the CrossBlue prototype unveiled at the January 2013 Detroit auto show. The company has said it wants to have the vehicle in dealer showrooms in 2016. The plant now produces just the Passat midsize sedan.

Fox said auto plant projects are much sought after because of the sizable economic spin-offs they bring.

“It’s not just the things happening at the plant, it’s … all the intermediate purchasing,” he said, citing supplier spending.

Jack Nerad, executive marketing analyst for Kelley Blue Book, said landing the SUV line would have a ripple effect across the supplier network, other companies that support the plant and even small businesses such as restaurants.

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