Volkswagen eyes $1 billion expansion of Mexican site for Tiguan output

Article by Andrew Christian, on March 12, 2015

Volkswagen plans a $1-billion investment for an expansion of its Puebla facility in Mexico to build a larger, redesigned Tiguan compact crossover. The spending will entail the installation of high-technology assembly lines, according to Andreas Hinrichs, chief executive of Volkswagen Mexico. The investment will also generate around 2,000 jobs and help auto parts suppliers retool their plants to support Tiguan output.

The site will commence building the Tiguan next year and VW will start selling the compact in 2017, Hinrichs said. VW is bound to redesign the Tiguan in 2017, with a long-wheelbase version bound to be rolled out in the United States.

According to VW, the production capacity for the long-wheelbase Tiguan will be 500 units per day, adding that it will shipped to North and South America and other global markets, excluding the European Union and China. VW’s Puebla site already builds the Golf compact underpinned by a version of the Modular Transverse Matrix or “MQB” platform that will also underpin the next Tiguan.

The next Tiguan is a vital part of the carmaker’s plan to boost its sales in the US by offering a broader SUV and crossover lineup. VW is bound to sell the Tiguan in the US in the second quarter of 2017, just right after the carmaker commences sale of its new midsize crossover in the first quarter. This midsize CUV will be larger than the Tiguan and will be built at VW’s Chatanooga site in Tennessee.

It will be underpinned by a different version of the MQB platform. Since President Enrique Pena Nieto took office until December 2014, investments in the auto sector in Mexico had topped $19 billion.

Volkswagen accounted for 475,121 vehicles of the 3.2 million vehicles build in Mexico in 2014, according to data from the Mexican Automotive Industry Association data show. Over 80 percent of those vehicles are bound for export. AMIA expects Mexico to build over 5 million vehicles by the end of the decade.

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