Volkswagen adds 2,000 jobs to build new SUV in Tennessee

It's no Microbus, but Volkswagen wants to haul American families again.

After years of delay and debate, the German automaker finally announced today it would build a seven-passenger SUV based on the CrossBlue concept at its Chattanooga, Tenn., plant. The $900 million project will add 2,000 direct jobs in Tennessee as the plant ramps up production by late 2016, with the CrossBlue targeting buyers of the Chevy Traverse, Ford Explorer and Toyota Highlander.

"With the midsize SUV, the expansion of the Chattanooga plant ... the focus is on the wishes of the U.S. customer," said VW Chairman Martin Winkerkorn. "This is also a strong signal for the U.S. as an industrial and automobile production location. The Volkswagen brand is going on the attack again in America."

The CrossBlue comes not a moment too soon for VW. Six years ago, the German giant set a goal of selling 1 million VWs and Audis a year here, and while Audi has held up its end, VW sales have fallen 13.4 percent this year even as the rest of the market has grown. VW has been slow to meet American desires for larger family haulers and smaller SUVs that weren't as popular in Europe, at one point teaming with Chrysler to build a lightly redesigned version of its minivans — the Routan — which sold poorly.

That hasn't dimmed its leadership's plans, part of a larger goal to become the world's largest automaker. In January, VW executives said the company will spend $7 billion over the next five years on new models for North America, and still plans to sell 800,000 Volkswagens a year in the United States by 2018 — or roughly double what it's likely to do this year.

The announcement of the SUV in Tennessee comes after months of debate over whether the plant should be unionized by the United Auto Workers. The UAW lost a bitterly fought vote in February, and last week announced it was opening a local union without formal recognition from the company that employees could join voluntarily. Tennessee even threatened to pull back up to  $300 million in incentives for the plant's expansion should the UAW vote prevail; the state said Monday it will provide $178 million in grants and improvements for the new model.

VW mentioned none of this Monday, but did make one labor-related move, appointing the head of its German workers union to the supervisory board of VW's American unit, saying he would " represent the views of the workforce."