VW builds case for large SUV for U.S. market

Volkswagen is building the business case for a large SUV in the United States. The vehicle is a key to the company's plan to nearly double the VW brand's U.S. sales to 800,000 units by 2018.

A three-row, seven-seat concept SUV, the CrossBlue, debuted in January at the Detroit auto show.

Ulrich Hackenberg, VW's board member for product development, said the company is contacting customers and dealers to estimate the SUV's potential sales and to build a business case.

"Right now, the cost is a little too high," said Michael Macht, VW's board member for production, of the business case developed so far. The former Porsche CEO said that expected cost tends to drop as the business case is refined. "That's always how it works," he said.

The SUV would be built in North America, Macht said, with Mexico and Chattanooga, Tenn., possible sites. VW has built the Passat sedan in Chattanooga since 2011. He said a new U.S. plant is an option, depending upon available local subsidies.

Canada is out of the running because it is too far from VW's supply base, Macht said.

VW has not yet discussed possible incentives for a second assembly line at the Chattanooga factory, Macht said. The plant has annual capacity of 170,000 units and produces about 135,000 Passats per year. The site has room for a second line.

VW sales chief Christian Klinger said the CrossBlue concept's "reception was really positive" at the Detroit auto show. He said VW may ultimately build two or three more nameplates tailored to U.S. consumers. VW already has revamped the Jetta and Passat for U.S. tastes.

The SUV, in particular, has support from the top of the company down.

"After the success of the U.S. version of the Passat," VW CEO Martin Winterkorn said last week at VW's annual press conference, "the goal is to establish ourselves in another core segment."

By Gabe Nelson- Automotive News