Volkswagen is to add 800 jobs at its US$1bn US factory in Tennessee to meet growing demand for the Passat.

It’s the second time this year that VW has increased its US workforce, having added 200 jobs. The German carmaker is eager to reduce its exposure to the strong euro by making cars in local markets.

The US plant in Chattanooga opened last year and now employs over 2,700 workers. VW is targeting 500,000 sales in the country this year, up nearly 13% year on year on 2011. The group's longer-term target is 1m US sales by 2018 and expects to break even there in 2013.

Growth was particularly strong for the VW brand in the US with sales up 43% to 30,577 vehicles - 8,189 of them Passats - and the group is already considering a second North American factory in the US or Mexico for its Audi brand.

Jonathan Browning, chief executive of Volkswagen Group of America, said staff at the Chattanooga plant have been working overtime to meet demand. Hiring more workers will allow it to extend weekly production capacity and reduce overtime for current staff.

VW is also investing US$40m to build a parts distribution warehouse - also in Tennessee - which will employ 45 people by 2016.