Report – Important US model delayed at Volkswagen image

According to people close to the matter, Volkswagen’s decision on where to build an all important new US model is delayed by an incentive fight between Mexico and Tennessee, the US state that houses the lone VW plant in the US.

While economically the struggle to catch the production of the new model is all important to both the automaker and the factory and state is produced in, ultimately the longer it takes for VW to make a decision, the longer its struggling US business would need to recuperate.

“VW is taking way too long again to tackle another pressing U.S. problem,” said Arndt Ellinghorst, London-based analyst at ISI Group. “The crossover will be a gainful addition to their portfolio, VW has got no time to waste.”

According to sources talking on condition of anonymity to Reuters, after the Mexican authorities pitched the German automaker for the local production of its future seven-seater crossover, the authorities in the state of Tennessee decided to reopened talks with Volkswagen.

The incentive war looks to hinder Volkswagen in making the decision, which, according to two of the cited sources, looks set to delay the site location at least until the end of June. The crossover has been announced already since January, during the Detroit auto show, being part of a broad investment plan for North America that would incur a $7 billion investment.

Via Reuters