Volkswagen will build a seven-seater crossover vehicle for the North American market at its Chattanooga, Tennessee plant.
According to Reuters, citing Frankfurter Allgemeine Zeitung, the Chattanooga factory will be chosen ahead of a site in Mexico because the Tennessee state government is providing free land, staff training, tax breaks and infrastructure upgrades worth about US$300m to the company.
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Volkswagen first unveiled its plan to build an SUV for North America last January. The car is expected to be launched in 2016.
Chattanooga currently builds a unique version of the Passat for North America.
