September 6

This Day in History

Automotive

Sep 6, 2007:

Volkswagen moves to Virginia

On this day in 2007, Volkswagen of America announces that it is moving its headquarters from Auburn Hills, Michigan to Herndon, Virginia. The company made the move, it said, to be closer to the East-Coasters who buy most of its cars. "You want to work in an environment where you see your customers," Volkswagen CEO Stefan Jacoby told the Washington Post. "You don't want to work where you basically see only American cars of the Big Three."

Ever since 1949, when Volkswagen began to import its cars from Germany to the United States, the company has had its ups and downs in the American market. During the 1960s and 70s, American customers bought millions of the company's iconic (they were "homely but cheap and reliable," the New York Times said) Beetles and tiny, fuel-efficient Rabbits. In 1978, Volkswagen became the first foreign car company since World War II to build a factory in the United States when it opened a plant in New Stanton, Pennsylvania that was designed to produce 200,000 cars every year. But as small, inexpensive, gas-sipping Japanese cars began to flood the American market in the 1980s, Volkswagen lots its grip on its customers. As a result, the Pennsylvania factory--by that time only turning out about 60,000 cars a year--shut its doors for good in 1987.

By the time Volkswagen announced its move to Virginia, the market share for its cars, now produced exclusively in Europe, had sagged to about 2 percent. In order to boost sales in the United States and to reduce the company's exposure to the sinking dollar (which, as one Bloomberg News reporter pointed out, "makes the carmaker's vehicles more expensive in the United States"), in July 2008 Volkswagen announced plans to replace its long-shuttered Pennsylvania factory with a new one in Chattanooga, Tennessee. (State economic development officials promised the company hundreds of millions of dollars in tax breaks and other incentives in hopes that, as one commissioner told reporters, the Chattanooga factory would become "an anchor project that will draw thousands more automotive jobs to the state.") Company officials say that the plant, scheduled to be up and running by 2011, will employ 2,000 Tennesseans (and create an additional 9,500 jobs in construction and other fields). It will produce 150,000 vehicles--mostly a new midsize sedan developed especially for the American market--each year.

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