(Reuters) - In south-central Tennessee on Tuesday, Volkswagen AG marks the grand opening of a $1 billion assembly plant that looms large in the German automaker's plan to unseat Toyota Motor Co as the world's largest automaker.
The plant, where Volkswagen is already building its 2012 Passat car, is a key part of the company's plan, which faces numerous hurdles and doubters within the auto industry.
By shifting production to the United States and using local parts suppliers, Volkswagen can guard against exchange rate fluctuations that can eat away at profit, analysts said. Building cars in the United States also allows the company to keep close track of changing tastes in the world's No.2 auto market, where consumer trends are often set.
Building a plant in the United States is also a sign of goodwill and demonstrates the company's dedication to the U.S. market, analysts said. As part of its global growth plans, Volkswagen aims to nearly triple its sales in the United States to 1 million in 2018 from about 360,000 in 2010.
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