Volkswagen's U.S. plant may make Porsches, Audis

Volkswagen's planned U.S. factory is likely to also make upscale Audis and Porsches, VW of America CEO Stefan Jacoby said Thursday.

In an interview with USA TODAY, Jacoby said of the planned U.S. plant: "For Audi and Porsche, it would be an opportunity to add on units" as German parent VW AG seeks to triple U.S. VW and Audi sales to a million total by 2018 and boost sales dramatically worldwide.

Porsche is VW AG's biggest shareholder, with 31% and has been involved in many joint ventures with VW. The VW and Audi brands are among a VW AG portfolio ranging from low-price European-market Seat and Skoda to high-end Lamborghini and Bentley.

The U.S. factory, Jacoby said, will be built in Tennessee, Alabama or Michigan. "July, the latest, we will make our decision," he said. He said the factory should be in operation by the end of 2010, an ambitious schedule for a plant not yet under construction.

A U.S. factory would avoid the currency-exchange whammy, in which the falling U.S. dollar has made imported goods more expensive. VW, a mainstream brand, has less room to boost prices to make up the difference than luxury brands such as Audi.

According to a report from Germany published Thursday by trade magazine Automotive News, Porsche denied it plans to build its current Cayenne SUV in VW's U.S. plant, but it would not comment on the next-generation SUV or other Porsches.

Porsche and Audi buyers value the German heritage of those brands and might balk at U.S. versions. "My instinct is that it would annoy Porschephiles more than Audiphiles. I think the Porsche guys might get up in arms a little bit," says Stephanie Brinley, senior manager of product analysis for marketing consultant AutoPacific.

VW pioneered what are called transplant factories in the USA, building about 1 million cars at Westmoreland, Pa., from 1978 to 1988.

Jacoby, who took over U.S. operations on Sept. 1, said VW will "custom tailor" VWs for U.S. tastes. He said U.S. buyers appear to like "soft-riding" cars that don't need high top speeds because of "speed limits that are much more rigorously enforced" than in Germany.

But he emphasized that U.S. VWs won't be sloppy-handling or sluggish.

Jacoby acknowledged that VW "did a lot of things wrong" to earn a U.S. reputation as unreliable and costly to maintain. But he said improved quality — "our warranty costs are down considerably" — and a new three-year free maintenance offer should raise perceptions.