VW Compact SUV wil be built in Wolfsburg

[ASurroca]

28 September 2005
Compact SUV will be built in Wolfsburg

Emden also wins production of new model



Wolfsburg, 27 September 2005 - The Board of Management of Volkswagen AG decided on Monday evening to build the compact SUV with AUTO 5000 at the Wolfsburg plant. The decision was preceded by negotiations with the General Works Council and the IG Metall trade union to establish an economically viable basis. At the same time, the Board of Management made a commitment to build a new model at the Emden plant from 2008.

Dr. Wolfgang Bernhard, Chairman of the Board of Management of the Volkswagen brand, said: “We are pleased that, together with the Works Council and IG Metall, we have been able to make the necessary cost reduction of some 850 Euro per vehicle. Finding a solution was not easy for any of those involved. What is important, however, is that we can now produce and export the vehicle from Germany at competitive conditions.”

The compact SUV will be built by AUTO 5000 GmbH. To this end, approximately 1,000 apprentices at Volkswagen AG who will have completed their training in 2006 or 2007 will join the present workforce at AUTO 5000. The apprentices will be hired at AUTO 5000 terms of employment, but are to be given an undertaking from Volkswagen AG to return to employment there in the event of manpower requirements at the company.

Bernd Osterloh, Chairman of the General Works Council, said: “It was important for us to build the compact SUV in Wolfsburg and safeguard jobs for over 1,000 colleagues.”

The collective bargaining partners also agreed to build a further model from the product initiative at the Emden plant under a modified company collective agreement, the terms of which still have to be finalized. This assumes that an economically viable basis for the vehicle can be found. Details will be settled by mid-October.

Furthermore, the management and Works Council also decided to enhance the competitiveness of the Wolfsburg plant further in order to build an additional model in Wolfsburg on this basis. Decisions are still pending.

source: Volkswagen AG press release

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This news comes just weeks after hearing that production of Volkswagen's SUV might be destined for Volkswagen's Palmela plant in Portugal. Apparently, while the Palmela plant would have meant a cost reduction of 1000 Euros, but via the AUTO 5000 project responsible for the Touran, apparently they've cut costs by 850 Euros, nearly as much as a move to the Palmela plant would have saved.

Despite this, I can't say that this bodes well for the United States. After all, anything out of Wolfsburg is getting prohibitively expensive for export to the United States. I think that if the AUTO 5000 deal manages to keep the US-adjusted price below the BMW X3 (shouldn't be difficult, since BMW dropped the 2.5i model and the base price is now a whopping $36,800) and in-line with the Land Rover Freelander (MSRP $26,830) and perhaps the Nissan Murano (MSRP $27,150), then the compact SUV could still make it alive and well in the States.

The Touareg was aimed more at vehicles like the BMW X5 and the Mercedes-Benz ML-Class than vehicles like the Jeep Cherokee and Nissan Pathfinder. The new Passat is gunning more for the BMW 3-Series than the Honda Accord or the Toyota Camry. The forthcoming Eos obviously has the Volvo C70 in its sights. I think it stands to reason that the compact SUV will target the BMW X3, and not have to worry about cheaper "cute utes" like the Honda CR-V and Toyota RAV4 (e.g. the Nissan Murano doesn't, despite Nissan not being a luxury brand, per-se).

Notice that you can actually see the compact SUV (project 365, aka, Marrakesh, aka...) in the background of the photograph. That means this little 'ute is about finished, and we should expect an official unveiling soon enough.