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VW grab $165.8 million (USD) to set-up for new SUV

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Volkswagen Cross Blue Concept Car (above)
will be the basis of a 2017 model mid-size SUV.

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by Stephen Walker

15th July, 2014

Volkswagen has hit the big time in gaining taxpayer funded initiatives in the USA as the company comes to grips with falling sales in America.

New mid-size SUV

Originally shown at the 2013 Detroit Motor Show, the CrossBlue Concept will be the basis of a new mid-size SUV.

The new model will sit in the product range between Tiguan and Touareg, filling an obvious void in the line-up. The new model will be a seven-seater and is set for release in North America in very late 2016, possibly early 2017. There is no early advice about the unnamed new model being exported.

The new model was announced in Wolfsburg (Germany) yesterday at a gathering that included officials from Tennessee (which is always a good indicator of tax payer money being involved).



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Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, announced that the new mid-size SUV will be made at an expanded plant in Chattanooga (Tennessee, USA) in addition to the Passat which is already in production at the plant.

State-funded initiatives

Volkswagen hasn't announced that taxpayer money is going into the new model project. However, Next Car can confirm that Volkswagen is to receive over $165 million (USD) to assist with the project. Volkswagen has announced it will invest approximately $900 million (USD) in the venture.

Media release from Tennessee Governor

Volkswagen hasn't said a word about the big funding package from Tennessee tax payers.

However, in a media statement Gov. Bill Haslam's office issued at 07:17 AM yesterday indicated in part "The state of Tennessee is providing a $165.8 million grant for costs associated with site development and preparation, infrastructure, production equipment acquisition and installation, and facility construction. In addition, the state will provide a $12 million grant for training new employees."



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Losing sales

Volkswagen continue to lose sales right across the Americas. The new model is intended to improve the brand's sales outlook.

Volkswagen Passenger Cars delivered 282,600 vehicles in the North America region in the 6 months to June 2014, down from 309,600 units a year ago (-8.7per cent).

In the US alone, Volkswagen sales for the six months fell from 206,800 to 179,100 reflecting a massive drop in sales of 13.4 per cent. Hence the need for new product that may appeal to American customers. To compare this sales performance and to demonstrate some perspective it is noted that Toyota increased their sales to 1,026,918 units, up 3.7 per cent over the same period in 2013 which reinforces VW's falling sales problem.

In the South America region, deliveries from January to June fell by 21.1per cent from 401,900 to 317,300 units (year on year).

Production

The unnamed new model will begin production in late 2016. As yet, the predicted production volumes have not been announced.


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