VW has yet to decide where it will build its upcoming midsize SUV for North America, as Mexico and Tennessee are each offering incentives for the German carmaker in order to get production of the new model.
The tug-of-war between Mexico and Tennessee over incentives is delaying VW’s decision and its efforts to fix its underperforming U.S. subsidiary. According to a report from Reuters, the state of Tennessee last week reopened talks with VW on tax breaks and infrastructure to convince the automaker to build the midsize crossover at its Chattanooga plant.
Tennessee had offered VW a $300 million package of incentives to get production of the crossover, but state governor Bill Haslam withdrew the offer amid a February vote by factory workers on unionization. There are no details of incentives currently being discussed, but Tennessee needs to top Mexico’s offer.
Analyzing the two offers means it could take at least until the end of June for VW to pick a production site, despite the fact that the automaker had initially hoped to take the decision by now. The three-row crossover was announced at the Detroit Auto Show in January as part of a $7 billion investment package for North America.
The crossover might not go on sale in the U.S. until 2016; five years after VW launched local production of the Passat sedan. Sources said VW prefers the modern Tennessee plant over the 50-year-old facility in Puebla, Mexico, but didn’t rule out the possibility that the crossover would be produced at Audi’s new plant in San Jose Chiapa, Mexico.
By Dan Mihalascu
Note: 2013 VW CrossBlue Concept pictured
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