Volkswagen US Facility Plans Progress

FRANKFURT, Germany -- Volkswagen AG, Europe's largest carmaker, said Tuesday that it will outline plans for a production facility in the U.S. in July.

Video: Clarksville Likely Site If Volkswagen Chooses Tenn.

Sites in the states of Alabama, Tennessee and Michigan have been named as being in the running for the new plant, the company said, confirming a report in the German business daily Handelsblatt. But Volkswagen wouldn't yet say where the facility will be.

Clarksville would likely be the site if Tennessee is chosen for the plant. The site could be built on a farm outside the city in Montgomery County.

On Monday night, the county voted to spend $20 million to buy the farm land.

State Rep. Joe Pitts said that in a deal like this, negotiations are day-to-day right up to decision time.

But Volkswagen will see one less hurdle in Clarksville with the land now in county hands.

State Sen. Rosalind Kurita said the road has been paved for Volkswagen to come but that another small hurdle would be to improve road access to Interstate 24.

And railroad service may be a costly hurdle, because Clarksville only has advantage to Chattanooga in that category.

Volkswagen spokesman Andreas Meurer said any plans would have to be approved by the company's supervisory board, and that actual production at the facility wouldn't start until at least 2010.

Volkswagen closed its last U.S. production facility in 1988.

But officials at the company have said the surging Euro has pushed plans for a new production facility forward. The 15-nation currency has been hitting record highs in recent weeks against the U.S. dollar, making goods exported from Germany more expensive in the United States.

Meurer wouldn't say what Wolfsburg-based Volkswagen would spend on the facility or what its actual size would be, but that normally such factories have to produce at least 120,000 vehicles each year to make them viable.

The company has said in the past it could also produce models of other brands such as Porsche or Audi at the new plant, but probably not until 2015 at the earliest, Meurer said. Porsche holds 31 percent of the shares of Volkswagen, while Audi is a Volkswagen subsidiary.

The farm in Montgomery County has been in the Teeter family for 200 years, and the family said they believe even if Volkswagen doesn't end up there, another big company eventually will.