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Associated Press
VW product executive Ulrich Hackenberg introduces the CrossBlue concept SUV. The new seven-passenger SUV will be built in Chattanooga, Tenn.

VW expands in Tennessee

Addition of new 7-passenger SUV means 2,000 jobs

– Volkswagen plans to build a new seven-passenger SUV at its factory in Chattanooga, adding about 2,000 factory jobs as it tries to reverse U.S. sales that have fallen for the past two years.

The German automaker announced Monday that it will invest $600 million to expand the factory and set up a new research center that will employ about 200 engineers. The research facility will coordinate products for North America to quickly include customer feedback into planned and existing models, the company said.

The announcement comes after months of political wrangling over the role of organized labor at the factory, which now employs about 2,400 workers and makes only one model, the Passat midsize car.

Production of the new SUV, based on the CrossBlue concept vehicle unveiled in Detroit last year, is scheduled to start at the end of 2016. It gives VW an entry into an important segment of the U.S. market – the family people hauler.

VW sales fell almost 7 percent last year and are down more than 13 percent this year, largely because the company doesn’t have competitive products in key market segments. VW had a big year in 2012, with sales rising 35 percent to more than 438,000. But sales fell to 408,000 last year, and the brand sold just 179,000 through June this year.

“The Volkswagen brand is going on the attack again in America,” said Martin Winterkorn, chairman of Volkswagen AG’s management board, repeating the goal of selling 800,000 Volkswagen brand vehicles in the U.S. by 2018.

Michael Horn, VW’s CEO in America, said seven-passenger, three-row SUV sales in the U.S. have almost doubled since 2009 to 1.4 million a year. The company plans to add about 538,000 square feet to the existing factory to build the new SUV.

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