Volkswagen AG will decide within a year about building an Audi plant in the US, the company's chief executive said at the opening of the new VW Chattanooga plant.
VW is counting on the new Chattanooga plant to lower the cost of the key Passat so it can better compete in the US, the Wall Street Journal (WSJ) said.
CEO Martin Winterkorn told the paper a US plant could also help Audi sales but the decision depends on whether the brand lifts volumes enough to justify having a factory of its own.
Rivals who have US plants, BMW and Mercedes-Benz, each now sell more than twice as many cars there as Audi a year.
Volkswagen aims to nearly triple its US sales to 1m vehicles a year by 2018. The VW brand would account for sales of about 800,000 vehicles, and Audi for about 200,000. Last year VW sold 256,830 cars and light trucks in the US and Audi 101,629.
The $1 billion Chattanooga plant is "a key driver of our long-term success in the US," Michael Macht, VW's top manufacturing officer, told the Journal.
The complex is designed to build 150,000 Passat sedans each year and can be expanded to 300,000, he said.
Macht said the company doesn't intend to export any vehicles from the plant. VW has lost money for a decade in the US because of unfavorable exchange rates between Europe and the US plus uneven sales results.
When VW's intention to build the plant was first announced, it laid out plans to export some of the vehicles made there, with a significant number going to Europe, the WSJ noted. Exporting cars from the US to Europe would turn the dollar-euro exchange rate into an advantage for VW.
The new plant makes it possible for VW to lower the price of the mid-sized Passat - the US version is different to the redesigned model just launched in Europe by about US$8,000 to roughly $20,000, in line with competitors including the (also US-made) Honda Accord and Hyundai Sonata. VW is counting on the lower price to drive up sales, the WSJ said.
Winterkorn said VW now produces parts that account for 85% of the cost of the vehicle in North America, lowering the impact of the currency translation.