Volkswagen will build a new manufacturing plant in Chattanooga in the US state of Tennessee which should be ready in early 2011, Europe's biggest carmaker said on Tuesday.
The plant is planned to have an annual capacity of 150 000 vehicles and VW will invest up to $1 billion in the site, the company said. VW has been suffering continued heavy losses in the US market due to the strong euro against the dollar.
"The USA market is an important part of our volume strategy and we are now very resolutely accessing that market. Volkswagen will be extremely active there," CEO Martin Winterkorn said in a statement.
He said the site will help VW reach its goal of selling 800 000 vehicles a year in the United States by 2018. The plant will include body production, paint-shop and assembly operations.
The first vehicle to be manufactured there will be a new mid-size sedan aimed at the US market, the statement said.
The states of Alabama and Michigan had also been in the running for the plant.