Volkswagen AG’s share price up, invests $900 million in its US factory to build new SUV model

Volkswagen AG, which is the worlds second-largest auto maker, made an announcement at a news conference and revealed that it intends to build a mid-sized sport-utility vehicle in 2016. The company is currently trying to bring a new life to its sales on the territory of the U.S.

The importance of the U.S. market to the company was emphasized by Volkswagen AGs Chief Executive Officer, who Mr. Martin Winterkorn said in the statement that was cited by Bloomberg: “The Volkswagen brand is going on the attack again in America.” As reported by the Wall Street Journal, Mr. Winterkorn also said: “We lost steam since 2003”.

Volkswagen AG shared that it plans to spend 900 million dollars, including 600 million dollars at a factory located in Chattanooga, Tennessee, where the auto makers seven-seat vehicle, dubbed Crossblue, is to be build. The company has focused on its performance on the market in the U.S., which now leads to the new project that is also expected to add 2 000 new jobs.

The companys Chief Executive Officer Mr. Winterkorn has promised to increase the sales of the Volkswagen brand on the territory of the U.S. to 800 000 vehicles annually by 2018. The production is planned to start at the end of 2016. This promise is considered part of a broader expansion strategy of the company, whose sales declined by 7% in 2013 and by another 13% over the first six months of 2014 in comparison to its performance a year earlier.

The head of automotive research at ISI Group – Mr. Arndt Ellinghorst commented on the situation for the Financial Times: “The VW brand has the substance to be successful in the US but so far management hasn’t delivered the right product for a very long time.” He also added: “This could change with the new SUV but it will take time and until then the brand will more likely lose money in the States.”

Volkswagen AG was adding 0.39% to trade at 185.05 euros per share by 11:48 GMT, marking a one year change of +14.51%.